Auto Owners loses attempt to avoid compensating injured lawn worker
Joseph Derry suffered serious injuries when the improperly secured machine he was using to load leaves on a pick-up truck fell and struck him. Derry worked for All Star Lawn Specialists, which had a broad set of insurance coverages with AutoOwners Insurance Company. It appears that the dispute boiled down to AutoOwners attempting to limit Derry's damages to workers compensation benefits and Derry attempting to secure a more complete recovery based on his boss's failure to properly lock down the leaf vacuum machine that fell on him.
Auto Owners wrote work comp, auto and general commercial liability policies on All Star. All Star paid Derry $11.00 per hour, but apparently paid him as an "independent contractor" and did not pay standard payroll taxes and unemployment or workers compensation coverage. Like many employers, All Star was attempting to "have its cake and eat it, too..." that is, trying to have the advantages of independent contractor status, but also the advanatages of employment status for its workers.
The Court of Appeals "reluctantly" held that Derry was not entitled to workers compensation because he also did a smidgeon of lawn work for others besides All Star. Therefore, his employer was not entitled to the "exclusive remedy" provisions of workers compensation. (And if a jury ultimately decides his boss wasn't negligent, he won't get any compensation--which is the goal All Star and Auto Owners would normally seek where an "employee-independent contractor" is injured on the job.)
The Court then addressed whether or not AutoOwners could exclude Derry from coverage under All Star's liability coverages. The insurer argued that its exclusion from general liability arising out of vehicle use and operation should apply; but the Court held that the clear language of that exclusion applied only if Derry was in direct contact with the leaves he was loading on the truck. Since he was not, the Auto Owners motor vehicle exclusion from coverage did not apply.
Furthermore, Auto Owners' claimed that the auto policy should not apply because Derry was injured by equipment affixed to the truck. The Court disagreed because it was undisputed that the leaf-blowing machinery that injured him was not attached to the vehicle--which is why it tipped over.