The Insured's Role in Subrogation Recovery

The transportation industry is unique and requires an insurance provider who understands the industry and its unique challenges. Midwestern Insurance Alliance has been deeply entrenched in the transportation industry for decades. Whether it is providing insurance coverages, developing safety resources, or aggressively managing multi-jurisdictional claims, Midwestern is constantly meeting the needs of the transportation industry.

One of the unique things about the trucking industry is that many companies elect to use a mix of employee (W2) drivers and independent contractor (1099) drivers. There are not many other industries that operate with that business model. For those trucking companies, providing statutory workers’ compensation coverage for both W2 employees and independent contractor drivers may simply be too costly of a proposition. That dilemma led Midwestern to work with a carrier partner to bundle a product that is referred to simply as the “Combo Program.”

The “Combo Program” provides for W2 employees to be provided with statutory workers’ compensation coverage and 1099 independent contractor drivers to be provided with both occupational accident and contingent liability coverage… all with the same AMBest-Rated A XV insurance carrier. This is much more than lumping 3 insurance products together and giving it a name for marketing purposes. These insurance products work in concert with one another. With one insurance carrier over all three products, the carrier agrees not to pick up independent contractor drivers on the workers’ compensation coverage, insofar as the independent contractor exposures are included on the occupational accident and contingent liability policies.

It is an excellent program and has worked extremely well for many motor carriers over the past several years. This program is limited to motor carriers with at least 15 trucks and requires that drivers residing in NC or NV be included in the workers’ compensation coverage. Beyond that, it is pretty flexible. The motor carrier can have any mix of W2 and employee drivers. This program even works for motor carriers with a 100% independent contractor fleet, in which the workers’ compensation policy would provide statutory coverage for their W2 employees (clerical, mechanics, warehouse, etc.). Let’s look at the 3 parts of the “Combo Program” separately.

Workers’ Compensation

As you know, workers’ compensation coverage provides medical and wage benefits to people who are injured or become ill at work. The coverage is mandated by each state and the wage and medical benefits vary by state. Workers’ compensation provides medical expenses, lost wages, and rehabilitation costs to employees who are injured or become ill “in the course and scope” of their job. It also pays death benefits to families of employees who are killed on the job.

Occupational Accident

Occupational accident coverage is an insurance product that provides both employees and their employers a certain level of financial protection in case of an injury incurred on the job. Motor carriers find this coverage beneficial, not only because of its cost relative to workers’ compensation, but also because it is a benefit that helps to attract and retain good independent contractor drivers, and because the benefits help reduce the likelihood of a lawsuit filed against the motor carrier in the event of a work-related injury. Unlike workers’ compensation, the benefits are not statutory. The following are the standard benefits in Midwestern’s “Combo Program” for occupational accident coverage. However, the motor carrier can increase or decrease those limits upon request.

  • Combined Single Limit: $1,000,000
  • Aggregate Limit: $2,000,000
  • Accidental D&D: $250,000
  • Death Benefit: $25,000
  • Survivor Benefit: $225,000
  • Accident Medical Benefit: $1,000,000
  • TTD Benefit: 70% to $500
  • PTD Benefit: 70% to $500

Contingent Liability

Contingent liability coverage provides a layer of protection by providing defense to the motor carrier in the event a qualified independent contractor driver attempts to collect workers’ compensation benefits as an employee. Should the driver be deemed an employee, the contingent liability will provide benefits equivalent to those payable under the respective state’s workers’ compensation statutes and employers liability law.

More Exciting Things to Come!

As mentioned at the onset of this article, Midwestern is constantly meeting the needs of the transportation industry. Soon Midwestern will be announcing an exciting game-changing product for small motor carriers. Stay tuned for more about that.