James was injured at Whole Foods. His employer's workers compensation carrier, Twin City Fire, paid him benefits because the injury occurred while he was employed by Phil's Fresh Foods.

Twin City used James' rights of recovery to sue Whole Foods because its negligence caused James' injury.

Whole Foods refused to pay because it claimed to be James' statutory employer at the time of the injury and was immune from such a suit.

Could James be an employee of both Phil's Fresh Food and Whole Foods at the time of the loss?

Click here to see what the courts decided.

The line between an employee and a subcontractor can be very murky when discussing coverage and payroll. However, it suddenly becomes crystal clear when a loss occurs or when the premium audit takes place. Mistakes in assigning payroll or obtaining coverage can be very costly to the client, even though the strategy at the time seemed to be an effective cost savings approach.

Click here to review an article that addresses independent status that may be helpful the next time your clients use contractors who act like employees.

Premium audit return premiums were common a few years ago. However, the reverse is now true as the economic recovery has begun. Audit premiums are due when the client receives the billing. Your client may be unpleasantly surprised when it must pay significant additional premium. That audit should also remind the agent to discuss increases for the current year so the client does not receive another billing letter next year.

Click here for a sample letter you may want to consider sending with the audit statement.

The importance of certificates of insurance can never be emphasized enough. When a contractor performs work on the insured's behalf, the insured can exclude that payroll from its premium base. However, unless the insured produces a certificate of insurance from that contractor, the excluded payroll is added back in and produces a substantial additional premium.

Click here for an emarketing article that explains the importance of an accurate certificate of insurance.