An employee of a construction contractor was injured in the course of his employment at a construction site. He sued the contractor's general liability and workers compensation insurer, alleging negligence on the part of the insurer in conducting safety inspections at the work site. He contended that conditions were not detected and corrected that caused his injury.

The trial court granted summary judgment to the insurance company. It said that liability could not be imposed on an insurer when the alleged negligence "arises out of the regular safety inspections of the work site conducted by the insurer in an effort to reduce the risk of loss covered by its insurance policy."

On appeal, the injured employee argued that "once the carrier undertook to perform the safety inspections, it must be held liable for conducting a negligent inspection." The court observed this principle to be applicable to "those situations wherein the action taken is for the benefit of another and not in furtherance of the interest of the one who assumes to act." (Matter of James v. State of New York, 90AD2d 342, 344, affd 60 NY2d 737.)

The appeal court noted, from pertinent language of the policy, that the insurer "had the right but not the obligation to conduct safety inspections of the worksite." The court concluded, from the circumstances of the case under review, that the inspections were undertaken solely for underwriting reasons. That the insured benefited from an effort by the insurer to minimize its exposure was incidental.

The judgment of the trial court was affirmed in favor of the insurance company.

Editor's Note: General liability and workers compensation policies contain provisions permitting the insurer to inspect work places, operations, machinery and equipment at reasonable times. These provisions generally include a statement similar to the following: "Neither the right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the Insured or others, to determine or warrant that such work places, operations or equipment are safe or healthful, or are in compliance with any law, rule or regulation." Agents can contribute to better understanding by stressing to insureds that an inspection of premises by the insurer does not guarantee that they are accident-free.

(JANSEN, Appellant v. FIDELITY AND CASUALTY CO. OF NY, Respondent. NY Court of Appeals. Feb. 13, 1992. Appeal from the Supreme Court, Appellate Division, Third Judicial Dept. 165 AD2d 223, 224. CCH 1992 Fire and Casualty Cases, Paragraph 3691.)