Character and necessity of such insurance In many of the States the compensation acts require the companies to issue policies giving a direct remedy to employés. It is obvious, from the wording of some of the statutes, that the various legislatures have not fully understood this subject. They have, in some instances, given to the employés the same right to recover against the insurance company that the employer has. Of course, this inadequately protects the rights of the employé. If they go a little further and say that the employé shall have the same right to recover against the insurer that the employer would have had if he had paid the compensation to the employé, this will be better. But even this is not entirely satisfactory, where the policy contains a provision that the insurer shall be liable only upon payment by the employer of a judgment entered after a trial of the issues. Because the employé may still find himself enmeshed in a net of technicalities by the requirement that the liabilty of the insurer must be predicated upon a judgment after a trial. Such a provision might be appropriate in common law, or so called employers' liability cases, as distinguished from workmen's compensation controversies, but it is utterly unfitted for the latter, in which periodical payments are the rule. The necessity of some form of insurance in compensation cases is obvious. Under the old rule a judgment for the full amount could be enforced at once when the case finally went to judgment. In compensation cases the payments are distributed over a long period of time, not infrequently for ten or fifteen years. A good many employers become insolvent every year. Unless insured in some way the result would be that while compensation payments were awarded they would be uncollectible, in many cases, after a certain number of payments had been made. Dependents of workmen who had been killed, as well as injured workmen themselves, would therefore find themselves without redress if there was not some method of securing the payment of such benefits. This has been recognized in all of the more recent Character and necessity of such insurance laws and is becoming a fixed policy in most of the American States. Up to this time four methods of insuring such payments have been devised. One is to compel the employer to demonstrate that he is of sufficient financial ability to insure such payments himself. This rule would apply to large corporations, such as railroads, where even if they should go into the hands of a receiver the preference in favor of such claims would be sufficient to insure their payment in most cases. The other is to compel the employer to take insurance either in a stock company or in a mutual association or in a State insurance fund. These problems are comparatively new and are now being worked out in a number of States, especially New York, Massachusetts, Michigan, California, Ohio, Washington and Connecticut. The old employers' insurance policies were invariably limited in amount. That is, it was specified that the company should not be liable for a sum in excess of $5,000 by reason of the injury to or death of one employé, and not more than $10,000 because of any one accident in which two or more employés were injured or killed. Of course, these amounts were sometimes increased. For example, policies were written with limitations of $10,000 and $20,000. Policies were also written with an initial limitation of $10,000 and a second limitation of from $25,000 to $100,000. Such policies are still so written, even in the compensation States, unless the law itself requires them to be unlimited. The first law to require the companies to write unlimited policies was that of Massachusetts. That has been followed by similar laws in a number of other States, notably New York, Michigan, Connecticut, California and Texas. In New Jersey the employers are not required to insure and the policies which have been written in that State have usually been limited in amount and have been in the form of the old employers' liability policies without right on the part of employés to sue the companies direct. California The specific provisions of the various statutes on this subject will be found in Article B of this Chapter. ARTICLE B-SPECIFIC PROVISIONS OF VARIOUS STATUTES ARIZONA There is no provision on this subject in the Arizona Act. CALIFORNIA 1 "§ 34. (a) Nothing in this act shall affect the organization of any mutual or other insurance company, or any existing contract for insurance or the right of the employer to insure in mutual or other companies, in whole or in part, against liability for the compensation provided for by this act; or, to provide by mutual or other insurance, or by arrangement with his employés, or otherwise, for the payment to such employés, their families, dependents or representatives, of sick, accident or death benefits, in addition to the compensation provided for by this act. "(b) Liability for compensation shall not be reduced or affected by any insurance, contribution, or other benefit whatsoever due to or received by the person entitled to such compensation, except as otherwise provided by this act, and the person so entitled shall, irrespective of any insurance or other contract, except as otherwise provided in this act, have the right to recover such compensation directly from the employer, and in addition thereto, the right to enforce in his own name, in the manner provided in this act, either by making the insur 1 Cancellation of Insurance Policy after accident; bankruptcy of employer. Applicant was injured while in the employ of the Locke Construction Company, which company subsequently had business difficulties and its compensation policy was cancelled by the Southwestern Surety Insurance Company. Held that applicant was entitled to recover from the insurance carrier, according to the law of 1911, inasmuch as, at the time of the accident, insurance was in force. The sum of $59.11 was awarded applicant, in addition to $48.75 which had previously been paid. Cunningham v. Locke Construction Co. and Southwestern Surety Ins. Co., Cal. Indus. Acc. Bd. California ance carrier a party to the original application or by filing a separate application, the liability of any insurance carrier, which may, in whole or in part, have insured against liability for such compensation; provided, however, that payment in whole or in part of such compensation by either the employer or the insurance company shall, to the extent thereof, be a bar to recovery against the other of the amount so paid; and provided, further, that as between the employer and the insurance company, payment by either directly to the employé, or to the person entitled to compensation, shall be subject to the conditions of the insurance contract between them. "(c) Every contract insuring against liability for compensation, or insurance policy evidencing the same, must contain a clause to the effect that the insurance carrier shall be directly and primarily liable to the employé and, in the event of his death, to his dependents, to pay the compensation, if any, for which the employer is liable; that, as between the employé and the insurance carrier, the notice to or knowledge of the occurrence of the injury on the part of the employer shall be deemed notice or knowledge, as the case may be, on the part of the insurance carrier; that jurisdiction of the employer shall, for the purpose of this act, be jurisdiction of the insurance carrier and that the insurance carrier shall in all things be bound by and subject to the orders, findings, decisions or awards rendered against the employer under the provisions of this act. "(d) Such policy must also provide that the employé shall have a first lien upon any amount which shall become owing on account of such policy to the employer from the insurance carrier and that in case of the legal incapacity or inability of the employer to receive the said amount and pay it over to the employé or his dependents, the said insurance carrier may and shall pay the same directly to the said employé or his dependents, thereby discharging to the extent of such payment the obligations of the employer to the employé, and such policy shall not contain any provisions relieving the insurance carrier from payment when the employer becomes insolvent or is discharged in bankruptcy, or otherwise, during the period that the policy is in operation or the compensation remains owing. California "(e) 1. If the employer shall be insured against liability for compensation with any insurance carrier, and if after the happening of any accident such insurance carrier shall serve or cause to be served upon any person claiming compensation against such employer a notice that it has assumed and agreed to pay the compensation, if any, for which the employer is liable, and shall file a copy of such notice with the Commission, such employer shall thereupon be relieved from liability for compensation to such claimant and the insurance carrier shall, without notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such person to recover such compensation, and the employer shall be dismissed therefrom. Such proceeding shall not abate on account of such substitution but shall be continued against such insurance carrier. "2. If at the time of the happening of an accident for which compensation is claimed, or may be claimed, the employer shall be insured against liability for the full amount of compensation payable, or that may become payable, the employer may serve or cause to be served upon any person claiming compensation on account of the happening of such accident and upon the insurance carrier a notice that the insurance carrier has, in its policy contract or otherwise, assumed and agreed to pay the compensation, if any, for which the employer is liable, and may file a copy of such notice with the commission. If it shall thereafter appear to the satisfaction of the commission that the insurance carrier has, through the issuance of its contract of insurance or otherwise, assumed such liability for compensation, such employer shall thereupon be relieved from liability for compensation to such claimant and the insurance carrier shall, after notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such person to recover such compensation, and the employer shall be dismissed therefrom. Such proceeding shall not abate on account of such substitution, but shall be continued against such insurance carrier. "(f) Where any employer is insured against liability for compensation with any insurance carrier and such insurance carrier shall have paid any compensation for which the |