Why Does Construction Insurance in New York Cost So Much?
A recent study revealed that insurance premiums for construction and contractor businesses in New York are 400% higher than the national average.
One of the leading drivers of high insurance costs in NY is the Scaffold Law (Labor Law 240/241). The Scaffold Law holds contractors, construction firms, property owners and employers strictly liable for all height or gravity related job site injuries, regardless of the employee’s negligence.
Essentially, an employee could show up drunk and purposely nose dive off of a milk carton and in return be rewarded with hundreds of thousands of dollars. The way the law is written, New York would find the contractor, employer and property owner absolutely liable.
This law not only allows the employee workers compensation, but allows him or her to collect against the contractor’s and property owner’s general liability policy. New York is the only State that has this strict liability law.
As you can imagine, this law is completely supported by the ambulance chasers (trial lawyers). You see their commercials on tv all the time. Wearing cowboy hats, they preach “if you have been injured, or think you may have been injured, contact us!”
As a result the cost of insurance is astronomically expensive for contractors in NY. This drives up the cost of worker compensation, general liability and umbrella excess liability policies.
The best course of action is to protect your business by implementing risk transfer as much as you can. These methods include indemnification and hold harmless agreements. In addition, it is absolutely critical to make sure your sub-contractors carry high limits and full coverage. Many carriers write worthless policies in NY because they specifically exclude contractual liability and law labor law claims. If an employee of a sub gets injured, and has one of these garbage policies, you could be stuck with the entire bill.
As construction insurance experts in New York, we have the knowledge and legal staff to protect your construction business and help mitigate the high costs.