There has been an interesting court ruling in Minnesota that illustrates the importance of getting the Named Insured correct and exact on a Workers Compensation insurance policy. The case, STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY v. MEYER, was decided in June by the Court of Appeals there. And although it might appear to some to be splitting hairs, in fact the decision makes clear the vital importance of getting the Named Insured exactly right.
In this decision, the Court of Appeals reverses the lower court ruling that a Workers Comp policy that insured "Timothy Pearson DBA Park Rapids Funeral Home," insured Timothy Pearson individually and thus would also have covered a ranch owed by Mr. Pearson. The Appeals Court ruled that the policy did NOT also insure Timothy Pearson as an individual, and thus did not provide coverage for a worker at the ranch owned by Mr. Pearson. But the details of the case are a bit complicated.
It turns out that Park Rapids Funeral Home was a corporation, not a sole proprietorship. The Appeals Court points out in its decision that if the funeral home had been a sole proprietorship, then the d/b/a language WOULD have also covered Mr. Pearson as an individual. But, the court decided, since a corporation is a separate legal entity, in this instance the Named Insured language did not extend coverage to Mr. Pearson as an individual.
To further complicate things, the injured worker involved worked at both the funeral home and the ranch, and at the time of injury was doing work that involved both workplaces. The Appeals Court ruling only means that the policy does not insure the ranch for Workers Comp. If it turns out that the worker is eligible for benefits from the funeral home, then the policy would cover the claim, as the policy clearly covered all workers of the funeral home.
The problems could have been avoided, of course, if the Named Insured on the policy had been set up to properly and accurately reflect the actual needs of the client. The policy should have had as Named Insured the proper corporate name of the funeral home, and the individual owner of the ranch (assuming that Mr. Pearson intended to also cover his ranch operations.)
A Workers Comp policy provides coverage for all workers of the named insured, but getting the named insured right and complete is a basic, but important, aspect of setting up the policy. And it is not uncommon for a WC policy to mistakenly fail to name all the various separate legal entities that should be named (including land trusts, if applicable.