Workers Comp. Coverage – Your Repo Agents Need It Even If the State Says They Don’t

“Repo Man Attacked With a Shovel”

“Car Owner Attacks Tow Truck Driver Trying to Repo Vehicle”

“In-Car Video Helps in Arrest of Man Who held Agent at Gunpoint”

“Pair Accused of Assaulting Repo Agent with Box Cutter”

 

These are just a few of the recent headlines documenting violent attacks on repossession agents in recent months.  There have been many more and these incidents have become common place.

This creates a potentially significant liability exposure for lenders and forwarding companies working with repo agencies that operate without workers compensation coverage.  If you aren’t familiar with workers compensation coverage, it protects and provides benefits for workers who are injured or killed while on the job.

In the past several years, insurance requirements on repossession agencies have grown significantly.  We all need to be mindful of any additional expense we are asking agents to bear.  However, based on our analysis, a proper workers compensation policy is a must.

The challenge comes from the fact that many repossession agencies are very small businesses and, as such, are often exempt under state law.  Most lenders and forwarders have accepted these exemptions and have waived the contractual requirement for those agencies.  However, when reviewing the issue with subject matter experts, they point to a number of risks:

 

• State exemption does not protect lenders and forwarders – Although a firm may be exempt under state law, this does not insulate 3^rd (or 4^th) parties from a claim relating to an injury while working on an assignment from that 3^rd By the way, even if an agency is exempt under state requirements they may elect to participate and receive the protection from lawsuits it provides.
• Increased risks with very small “mom and pop” agencies – The majority of repo agencies are very small businesses. This can pose an even greater risk for lenders and forwarding companies that a claim could turn into a defacto retirement plan for an injured repo agent.
• Exposure on sub-contractor relationships – To avoid some of the costs associated with employment, some agencies classify their drivers as independent contractors. The fact that this is in violation of most forwarder/lender contracts aside, such an approach does not insulate third parties from workers compensation claims.
• Increased Workers Compensation Costs – One of the things that WC insurance carriers look at closely when they do their audits is the workers compensation coverage of it’s sub-contractors.  Forwarders and lenders that work with agents directly may find that their insurance carrier demands an increase in premiums due to the fact that there are a lot of sub-contractors with no evidence of coverage.

 

Repossession work is dangerous and even the best repo agents can’t avoid every confrontation when out on the job.  Despite state exemptions and the increasing burden associated with insurance coverage, workers compensation coverage shouldn’t be ignored.