There are several exclusions and restrictions placed in insurance agreements to limit their exposure in personal injury cases in New York State (particularly in cases brought under Labor Law §§ 240(1) and 241(6)). What follows are a list of exclusions and restrictions to look out for and avoid when purchasing general liability insurance.
Broadened Injury to Employee Endorsements – This is an important exception to the exclusion for bodily injury to the insured’s employees. A standard exclusion does not apply to liability assumed by an insured under an “insured contract.” It is not uncommon for carriers to attach forms that eliminate this exception especially in New York where “action over” claims are common. These endorsements a made to preclude coverage for claims by injured employees. Usually these claims are made against the general contractor and property owner under Labor Law §§ 240(1) and 241(6). The general contractor or owner typically looks to the employee’s employer for coverage via the indemnification agreement in the in the construction agreement. The elimination of coverage and for these “action over” claims can create a major gap in coverage and leave companies personally liable in these Labor Law cases.
Independent Contractors Limitation/Subcontractor Warranty Endorsements – These types of endorsements establish risk requirements for subcontractors. These risk requirements are tied to the insurance or other risk management controls. Usually, it is required that a written indemnification agreement is in place in favor of the insured, specific insurance limits are required of the subcontractors, and the insured is named as an additional insured on the subcontractor’s General Liability policy. Failing to comply with the requirements set forth here can result in a penalty, including: (1) nullification of coverage relative to any loss resulting from the work of a subcontractor; (2) a lower limit of liability applies to any loss resulting from the work of the subcontractor; (3) a higher deductible or retained limit applying to any loss resulting from the work of a subcontractor; (4) a higher rate applied to the sub cost for the subcontractor.
Classification Limitation – Carriers use classification limitation to restrict coverage to certain specific operations and exposure. These classification seek to be fully descriptive of a contractor’s operations , which in many cases, is impossible. Thus, disputes arise when a contractor is involved in ancillary activities – necessary to the contract – that are not specifically laid out in the insurance agreement.
Cross Suits Exclusions – Sometimes carriers will include language that precludes coverage on lawsuits filed by employees. Generally, insurance agreements which exclude coverage from suits against any party should be avoided, especially in states like New York where “action over” claims are common.
Exclusions to Work Performed by Subcontractors – These exclusions are included to restrict coverage of work performed by a subcontractor of the insured. If your insured is a general contractor, it virtually eliminates completed operations property damage coverage, at least as respects the work done by or on behalf of the insured.