Good question, Here in New York many trade or self performing contractors run into insurance issues regarding this exclusion.
In short, Injury to employee exclusions restrict or eliminate liability coverage for any sort of employee injury.
Which sounds fine since you have workers compensation to cover your injured workers, right?
Well, unfortunately in New York, workers’ compensation isn’t enough.
Thanks to some very old laws known as the scaffold law or more formally labor law 240/241, New York workers in some cases can go above and beyond work comp to collect for injuries.
So if this is an option for workers to sue above and beyond why in the world would your insurance policy have an exclusion for injured workers? Because these claims are VERY EXPENSIVE.
And frankly the insurance companies are very careful with the wording of their insurance contracts. They do not want to extend coverage unless they get enough premium to cover the risk they are insuring.
All of that to say, if you are being told by a general contractor or building owner that your policy is insufficient due to an injury to employee exclusion or action over exclusion, be prepared to get a new policy or forfeit the job.
In addition, that new policy is going to be substantially more expensive than your current policy that excludes action over.
How much more expensive? Well that all depends on the type of work you do and the gross sales of your company.
But on average you are looking at a 25% increase in your general liability premium.
Unless you are on a $2,500 Artisan Contractors Policy, and then you are looking at more like 1000% increase. That isn’t a typo. Most policies with action over coverage start around $25,000 in NYC. Up-state only contractors don’t have it so bad.
Now, if you are like most contractors you are wondering how the heck can I afford this policy? I mean, after all you bid on the job based on your old insurance premiums right?
The good news is, often times you can renegotiate your bid with whomever is requesting you get this extremely important exclusion removed from your policy.
Why would the GC or building owner renegotiate? Well it’s very likely that your bid was drastically lower than the next closest competitor because your insurance cost was so much lower.
My recommendation for you if your policy is being rejected is the following simple plan.
Talk to whomever is denying your coverage,
Ask if they can give you some time to sort this out. (it typically takes 7-10 days to get a new GL policy)
Ask if they are willing to renegotiate the contract since your insurance premium is going to up.
Ask for a insurance requirement sheet with all limits required clearly spelled out.
Call or contact GRBM to get the conversation started and get a rough estimate of what your new insurance premiums will be.
Discuss the estimated insurance premiums with the party denying your coverage.
Gather your insurance paperwork.
Certificates of insurance ( One from each of the last 5 years)
At the end of the day, getting the right insurance coverage comes at an increased cost. But it opens new doors and increased job opportunities that you would otherwise miss out on.
I am not saying from a cost perspective it is beneficial because for every new job you still have that new rate for insurance applied to it.
However, you are also getting the enhanced coverage to protect your business when an accident occurs that results in an action over claim.
If you are ready to get the process started please reach out, we are happy to chat and give rough indications and see makes sense for you.