California: Employee Exclusion in Motor Carrier Insurance Policy

SUMMARY OF AMICUS BRIEF FILED 7/1/2014

TIDA filed an amicus letter in the California Supreme Court in support of TIDA member Global Hawk Insurance Company, which is seeking to overturn a decision of the Court of Appeal of California, First Appellate District, Division Two, entitled Global Hawk Ins. Co. v. Le, 2014 Cal.App. LEXIS 331 (Apr, 14, 2014). The issue is whether an employee exclusion in a commercial auto truckers liability insurance policy bars coverage for a motor carrier (a Global Hawk insured). The motor carrier was sued by a co-driver who was injured when, while he was asleep, the other driver allegedly caused a one-vehicle accident. The insurer denied coverage because of the employee exclusion and filed a declaratory judgment action. Even though the injured co-driver fit the federal statutory definition of “employee,” the Court of Appeal instead applied California law and held that material issues of fact existed at to whether the co-driver was an independent contractor and not an employee. If he is an independent contractor, the employee exclusion would not bar coverage, and the insurer would be required to defend and indemnify the motor carrier. The Court of Appeal decision appears to go against the greater weight of authority, which is that the federal statutory definition  of “employee” must be used to determine the meaning of “employee” in the employee exclusion. The decision may cause a substantial increase in insurance premiums for motor carriers because their insurers do not intend for coverage to extend to the insured’s injured drivers who are independent contractors but deemed statutory employees. TIDA would like to thank its member Scott McMickle of McMickle, Kurey & Branch, LLP, in Alpharetta, Georgia for authoring and filing the amicus letter on behalf of TIDA.

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