PART II COMPENSATION AND LIABILITY SEC. 25. 66 26. 66 27. "28. 66 29. 66 30. 31. INSURANCE. SECURITY FOR PAYMENT OF COMPENSATION. INSURANCE BY STOCK COMPANIES AND THE STATE INSURANCE FUND COVERAGE. PAYMENT OF COMPENSATION. STATE INSURANCE FUND-IMMUNITY. § 25. Security for payment of compensation. Every employer subject to the compensation law is required, under the provisions of Section 50 to give security for the payment of compensation. This security may be given by insuring with the State Insurance Fund, with a stock corporation or a mutual association authorized to write workmen's compensation insurance, or by furnishing satisfactory proof to the Commission of financial ability to pay compensation directly without insuring. The State Fund, stock companies, mutual associations and self-insurers are defined as "insurance carriers." (Sec. 3, subd. 12.) Every insurance policy issued by a stock or mutual company to insure an employer against liability to his employees must also cover liability to pay compensation (Sec. 54, subd. 4) and the injured workman may have recourse to the policy, through the Commission, to enforce payment of compensation. (Sec. 54, subd. 1.) Failure to give security for the payment of compensation makes the employer liable to a penalty in a sum equal to the premium payable to the State Fund and enables the injured workman or his dependents to sue for damages. Under Section 50 the method by which the employer shall give security for compensation is purely optional. In some of the decisions a different rule has been laid down from which it might appear that the compensation act was intended to establish a system of state insurance. In the case, Matter of McQueeney vs. Sutphen & Meyer, 167 App. Div. 528; 153 N. Y. Supp. 554, it was first intimated that the law should be construed on the theory that it contemplates insurance in the State Fund. The Court had under consideration the presumptions created in favor of the injured workman by Section 21 of the act. The point at issue in the case was whether the employee was injured while engaged in a hazardous occupation. The employer's business consisted of the sale of plate glass and also the manufacture of glass products. The Court said that as against the State Fund the injury would be assumed to be within the law unless otherwise shown and that where an employee is engaged in an employment declared hazardous, but at times works in a non-hazardous employment, the injury must be considered within the act if the employer fails to show all of the facts. It was held that employers who are self-insurers or who insure otherwise than in the State Fund, should be governed by the same rule and the award as made by the Commission against the employer and the insurance company was affirmed. In another case, Matter of Winfield vs. New York Central R. R. Co., 168 App. Div. 351; 153 N. Y. Supp. 499, in which the Court has under consideration the application of the statute to railroad employees, it was stated that "the Legislature evidently intended to take care of the workman through a state system of insurance." In arriving at this conclusion, the Court evidently overlooked the provisions of Section 25 of the act relating to the payment of compensation. In one portion of the opinion, the Court said, "The State Insurance Fund makes the compensation to the injured employee," and in another place, "The self-insurer, the company or the association pays the losses to the Fund. The Fund, in all cases, through the Commission, makes the compensation to the employee." As a matter of fact, Section 25, at the time this decision was rendered, required payment of compensation, except where the employer was insured in the State Fund, directly to the Commission and the Commission was authorized to disburse the same to the injured workman. The same section also authorized the Commission to require from employers and insurance companies deposits with the Commission for the purpose of paying compensation therefrom. This method was strictly followed by the Commission until Section 25 was amended by Chapter 167 of the Laws of 1915, since which time compensation is paid directly by the employer. As the law now stands, the obligation is on the employer to pay the compensation in the first instance and he is reimbursed by the insurance carrier whether it be the State Fund or an insurance company. In practice, payments are usually made directly by the insurance carrier. The only reference to the State Fund in connection with awards against self-insurers and insurance companies is contained in Section 27, under which, if the nature of the injury makes it possible to compute the present value of future payments with due regard for life contingencies, the Commission may, in its discretion, require the employer or insurance carrier to pay into the State Fund an amount equal to the present value of the unpaid installments of compensation. Such payments, however, are made in trust and the Fund thus created is separate and apart from the State Insurance Fund consisting of premiums paid by employers. So far the provisions of Section 27 have not been resorted to by the Commission and no trust fund has been created. The effect of the different forms of insurance and the protection which the employer receives against other forms of liability is treated in the sections which follow. § 26. Self-insurance. Where the employer furnishes satisfactory proof to the Commission of financial ability to pay compensation without insuring, the Commission requires a deposit of securities of the kind prescribed in Section 13 of the Insurance Law. The amount of securities has been fixed by the Commission in a sum equal to the premium which the employer would pay to the State Fund for a period of six months, with the minimum of $5,000. This class of employers are known as self-insurers and are included within the term "insurance carrier." Commencing July 1, 1916, and annually thereafter they will be required to pay a proportionate share of the expense incurred by the State in the administration of the workmen's compensation law. The employer who gives security for the payment of compensation by becoming a self-insurer, assumes the entire responsibility for the payment of compensation. He may, however, guard against catastrophe losses by reinsurance. Compensation is paid directly to employees by self-insurers except where the future installments are commuted into one lump sum and paid to the State Fund in trust, in which event self-insurers become relieved from further liability. About 250 employers have become self-insurers under the New York law. They include nearly all the large railroad corporations and many of the largest industries of the state. § 27. Insurance by Stock Companies and Mutual Associations. Insurance with a stock company or a mutual association not only protects the employer against the payment of compensation but against all other forms of liability for injuries received by employees. This protection is afforded through a standard form of insurance policy which covers employees, whether subject to the compensation act or outside of its provisions. An exception is the liability for damages for an injury received by a person employed contrary to the provisions of the Labor Law. Where a minor is employed in violation of Section 70 of the Labor Law, women and children in violation of Section 93 or Section 131, and an injury is received, the fact that the injured workman |