Does contractor work insurance also provide coverage for criminal proceedings?
Feb 28, 2019
Article by Itzick Simon
Contractors and developers are exposed to criminal proceedings, and enforcement in this area is only increasing. Official data published in the State Comptroller's report shows that each year the police forward dozens of cases against contractors and developers to the Attorney General's Office with a recommendation to file an indictment.
Furthermore, it is known that a criminal indictment for a work accident, which ends in conviction, may result in actual imprisonment behind bars. This, of course, alongside the fatal harm to the contractor, the developer, his family members, his employees, and the name and reputation that have been earned through much hard work.
It is important to remember that according to Section 304 of the Penal Code , 5737-1977 , causing death by negligence is a crime punishable by three years in prison, and in more extreme cases, contractors and developers may find themselves facing a serious charge of manslaughter, which is a crime punishable by 20 years in prison.
Article by Itzick Simon
Contractors and developers are exposed to criminal proceedings, and enforcement in this area is only increasing. Official data published in the State Comptroller's report shows that each year the police forward dozens of cases against contractors and developers to the Attorney General's Office with a recommendation to file an indictment.
Furthermore, it is known that a criminal indictment for a work accident, which ends in conviction, may result in actual imprisonment behind bars. This, of course, alongside the fatal harm to the contractor, the developer, his family members, his employees, and the name and reputation that have been earned through much hard work.
It is important to remember that according to Section 304 of the Penal Code , 5737-1977 , causing death by negligence is a crime punishable by three years in prison, and in more extreme cases, contractors and developers may find themselves facing a serious charge of manslaughter, which is a crime punishable by 20 years in prison.
The main differences between a basic policy and a professional policy
Event date – February 2017.
The first point in this matter is under what conditions can the insurance coverage regarding criminal defense expenses be exercised. Does it take effect immediately upon the occurrence of the event that may give rise to criminal proceedings (the moment of the accident), or does it come into effect only upon the filing of an indictment?
In other words, is the insured entitled to insurance coverage even during the initial police investigation stages, immediately after the accident, or will the coverage only be valid when an indictment is filed, and any expenses incurred before an indictment is filed will be from his/her own money.
This issue is weighty. Criminal lawyers, and in particular defense attorneys specializing in the construction industry, rightly emphasize the importance of seeking legal advice promptly (ideally one hour in advance, or even one minute in advance).
If coverage does not apply from the moment of the accident, but only from the date of filing an indictment, the insured will not be able to use the policy at the critical moments of the beginning of the police investigation. This not only involves high legal expenses, but also a service that has a fateful impact on the future case.
The condition for insurance coverage
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Experience shows that contractors and developers who immediately sought legal advice from a criminal lawyer after the incident occurred, as well as additional help from professionals such as accident investigators and safety investigators, have in many cases succeeded in preserving their rights and sometimes in preventing the finger of blame being pointed against them.
On the other hand, suspects who acted independently after the incident, without seeking advice, complicated themselves. Among other things, by taking steps that could be perceived as obstructing investigation procedures, self-incrimination, etc. In many cases, in good faith.
To summarize this point - the sooner the criminal lawyer arrives at the site, and preferably accompanied by professionals such as accident and safety investigators, the more likely it will be that the incident will be handled professionally.
Take for example the case of a client of our firm, who purchased a contractor insurance policy with our help that also includes extended coverage for defense in criminal proceedings.
When scaffolding collapsed at the construction site under his control, and the news quickly reached the media in light of the serious injuries to a number of workers, we were able to quickly dispatch both a criminal lawyer specializing in the field and professional investigators.
The team, whose expenses were fully covered by the contractor's policy, managed to arrive at the site even before the police investigators, and was able to calm the insured and (more importantly) stand up for his rights.
The importance of prompt legal and professional advice
Another important issue regarding defense expenses for criminal proceedings in a contractor's work insurance policy is the scope of coverage.
In basic policies, coverage is usually limited to a maximum ceiling of up to 200,000 shekels for a single case and up to 400,000 shekels for the entire insurance period. Furthermore, the cost of coverage is usually subject to the minimum rate for legal representation in criminal proceedings according to the "Bar Association Tariff."
The insured cannot choose any lawyer he wishes, and must use criminal lawyers who work at a minimum rate.
This is no trivial matter. Not every defense attorney specializes in representing contractors and developers in criminal proceedings at construction sites, a field that requires extensive knowledge and understanding of safety regulations and expertise in the field of accidents.
Lawyers who specialize in this subject are not usually the cheapest on the market (to put it mildly). A limitation on the lawyer's fees is a significant limitation on the insured, who will likely be in their shoes on the day of the ruling.
In light of the above, when drawing up a contractor's policy, one must verify these two aspects with the insurance company. Both that the insurance amount will be appropriate (preferably not less than 400,000 shekels for a single case), and that it will be determined according to a fair rate and not a minimum rate. Also, in order to deal seriously with future criminal proceedings, it is important to involve various professional experts in the case, such as accident investigators, safety experts, etc.
While in basic policies the fees of these experts are not part of the insurance coverage, in an extended policy this is addressed.
Scope of coverage
In conclusion – four rules of thumb
Contractors' insurance is a profession in its own right in the insurance industry. Purchasing a contractor's policy should be done with the guidance of an insurance agency that is knowledgeable in the ins and outs of the construction industry.
Only an insurance agency specializing in construction insurance will have the tools and capabilities to handle complex aspects of the necessary insurance coverage, while optimally expanding the insurance coverage and providing optimal protection for the insured.
The end of the matter is in the foresight. If the policy is drafted correctly from the start, with specific extensions for criminal aspects, the insured will benefit from comprehensive and high-quality coverage. Among other things, he should emphasize a number of critical aspects:
✓ Defining an amount – at least 400,000 shekels per case and insurance period.
✓ Conditions for coverage – Coverage for defense expenses in criminal proceedings should be expanded so that it is not subject to the filing of an indictment, but rather applies immediately upon the occurrence of the event.
✓ Experts, investigators and consultants – including expenses required for experts, investigators and consultants in addition to the criminal lawyer's fees.
✓ Providing compensation according to the definition of a reasonable fee – and not according to a minimum fee rate.
Contractors' insurance is a profession in its own right in the insurance industry. Purchasing a contractor's policy should be done with the guidance of an insurance agency that is knowledgeable in the ins and outs of the construction industry. Only an insurance agency specializing in construction insurance will have the tools and capabilities to handle complex aspects of the necessary insurance coverage, while optimally expanding the insurance coverage and providing optimal protection for the insured. The end of the matter is in the foresight. If the policy is drafted correctly from the start, with specific extensions for criminal aspects, the insured will benefit from comprehensive and high-quality coverage. Among other things, he should emphasize a number of critical aspects:
✓ Defining an amount – at least 400,000 shekels per case and insurance period.
✓ Conditions for coverage – Coverage for defense expenses in criminal proceedings should be expanded so that it is not subject to the filing of an indictment, but rather applies immediately upon the occurrence of the event.
✓ Experts, investigators and consultants – including expenses required for experts, investigators and consultants in addition to the criminal lawyer's fees.
✓ Providing compensation according to the definition of a reasonable fee – and not according to a minimum fee rate.
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