Can money due you be withheld ending the receipt of an insurance claim check?

I run a small excavation business. During a job there was an incident where a pipe worth $10,000 was hit. We have put through an insurance claim for the incident. However, the company we where working for has withheld $10,000 worth of our invoices until they receive the insurance claim money. Is this legal?

Asked on March 19, 2018 under Business Law, Alaska


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

No, it is not legal. Their obligation to pay you for the work you did is independent of any amounts they may be entitled to for insurance; the one does not depend on the other. They have to pay you for your work, pursuant to the contract or agreement (whether written or oral) setting out how, when, and how much you are paid, even if they are waiting for insurance. If they will not, you could sue them for "breach of contract" for the money.

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