The cheapest policy could put your business and your assets at risk
Many contractor liability insurance policies in New York exclude crucial coverage. So while you may save money in the short term, the insurance coverage is virtually nonexistent. If you have a claim, you may be find yourself without coverage and on the hook for potentially thousands of dollars.
There are a few very important exclusions you have to watch out for of when reviewing your liability policy.
Labor Law Exclusion – Insurance carriers frequently include exclusions to eliminate coverage arising out of employee injuries. These are typically referred to as a labor law exclusion. The fact is that majority of liability claims in New York arise out of these “action over” claims by employees. Often these claims are against the owner or general contractor. The allegations are that they violated the New York labor law safety requirements. The general contractor or owner would then look to the employer for coverage by means of the indemnification agreement. If you have this exclusion on your policy, you’re out of luck because your insurance won’t cover you.
Contractual Liability Exclusion – This limitation goes hand in hand with the labor law exclusion. It changes the definition of an insured contract. So the liability you assume by signing a contract with the general contractor or owner, will not be covered by insurance.
So if one of your employees, or anyone for that matter, gets hurt a job site and he sues the owner or GC you’re contractually obligated to cover the lawsuit. However, if you have this exclusion your policy will not indemnify the owner and you’ll end up paying out of pocket. This is also known as third party “action over” coverage.
The majority of claims in New York arise out of employee lawsuits. So while you may be very happy with the premium you’re paying, the reason it may be so cheap is that it essentially provides no coverage at all.
Please review your policies carefully.
