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The peculiar risk doctrine, which is also known as the special risk doctrine, holds that a person who hires an independent contractor to perform work that is inherently dangerous (a peculiar risk) can be held liable for tort damages when the contractor's negligent performance causes injuries to others. At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor's negligence; this was based on the belief that the person doing the hiring had no right of control over the contractor as he went about his tasks so there was no liability. However, over the years, as is so often the case, courts created many exceptions to that common law general rule and the peculiar risk doctrine was one of the exceptions. The reasoning behind the doctrine was that an innocent third party injured by the negligence of an independent contractor should not have to depend just on the contractor's ability to pay to receive compensation, and so who better to act as another source of compensation but the person who was to benefit from the contractor's work; between an innocent injured person and an innocent person who contracted for some work, the risk of loss was more fairly allocated to that person for whose benefit the work was undertaken.

Such reasoning is not altogether unacceptable. Indeed, the owners and contractors protective liability coverage form is meant to apply to bodily injury and property damage arising out of “operations performed for the named insured by the contractor specified in the declarations”. A problem arose, though, when some courts expanded the peculiar risk doctrine to allow the contractor's employees injured on the job through the negligence of the contractor to seek recovery from the person who hired the contractor, in addition to any workers compensation paid to the employee.

A majority of courts around the country do not support this viewpoint. See, for example, Wagner v. Continental Casualty Company, 421 N.W.2d 835 (1988); Peone v. Regulas Stud Mills, 744 P.2d 102 (1987); Jones v. Chevron USA Inc., 718 P.2d 890 (1986); and Vertentes v. Barletta Company, 466 N.E.2d 500 (1984). For your information, the majority opinion has now taken root in California . In Franklin Privette v. Superior Court of Santa Clara County, 854 P.2d 721 (1993), the California Supreme Court in no uncertain terms ruled that the peculiar risk doctrine provides no tort remedy against the person who hired the contractor for employees of that independent contractor who have been injured on the job through the negligence of the contractor.

The California court reasoned that additional recovery from the person who hired the contractor advances no societal interest that is not already served by workers compensation. Furthermore, the court held that the principal who hires an independent contractor should be subject to no greater liability than the contractor, whose own exposure is limited (through exclusive remedy) to workers compensation; this is especially so since the cost of workers compensation insurance is included by the contractor in his contract price and, thus, is ultimately borne by the person who hires him. Basically, the California Supreme Court is saying that the exclusive remedy of workers compensation is alive and well in California and when such remedy applies in the case of an injured employee, nothing like the peculiar risk doctrine will be allowed to destroy the viability of that remedy.