The Importance of Reporting Damages to Insurers by the Employer
Accidents can happen anywhere, including at the workplace. Managing directors are typically responsible for handling accidents that occur on their premises, and it is for this reason that most companies have liability insurance. However, it is crucial to understand how important it is to report any damages to insurers, as failure to do so can have far-reaching consequences.
An Illuminating Court Case
A recent court case in the Netherlands (Rechtbank Overijssel 8 March 2023, ECLI:NL:RBOVE:2023:887) highlighted this. An employee of a construction company suffered severe spinal injuries while at work in late 2014. Despite the company having liability insurance, the employer did not report the accident to their insurer.
When the company ran into financial troubles and was declared bankrupt, the coverage of the insurance policy lapsed due to non-payment of premiums, leaving the injured employee without a claim. As the employee could no longer rely on the bankrupt company, he held the director of his former employer personally liable for his damage. The question at the heart of the proceedings was whether the former director was liable for the damage the employee had suffered as a result of a workplace accident in 2014. The crucial factor was whether the former director could be seriously personally blamed for not reporting the damages to the insurer. The court answered this question affirmatively, making the director personally liable for the employee’s damage. This unfortunate event underlines the necessity for directors to report workplace accidents to insurers promptly and adequately.
Why Report Damage to insurer?
There are several reasons why reporting damages to insurers is crucial:
- Claim approval: For an insurance claim to be approved, it must be reported within the policy period. If a claim is made after the policy period, the insurer can deny the claim, leaving the party with damage without compensation.
- Legal implications: As seen in the above case, failure to report can have legal consequences. The court ruled that the director of the bankrupt company could be held personally liable for the employee’s damage because he did not report the accident to the insurer despite multiple requests.
- Risk management: Reporting damage helps with risk management. It enables companies to analyze the causes of accidents and develop strategies to prevent similar incidents in the future.
- Maintaining trust: Finally, reporting damage promptly helps maintain trust between the insurer and the insured. Failure to report damage can strain this relationship and can lead to increased premiums or non-renewal of the policy.
In short, the importance of reporting damage to the insurer cannot be overstated. Directors have a duty to report workplace accidents promptly to their insurer. This is not only crucial for claim approval and risk management but also helps maintain trust with the insurer and can prevent legal implications, as demonstrated by the Overijssel court case. It’s a simple act that can save a lot of trouble in the future.
