Policies What You Don’t Know Can Cost You Millions
New York contractors operate in one of the most aggressive legal and regulatory environments in the country. Labor Law claims, multi-employer job sites, vertical construction, and an active plaintiffs’ bar make liability insurance not just a formality, but a critical survival tool. Yet many contractors unknowingly carry policies riddled with exclusions and endorsements that can quietly erase coverage when it is needed most.
Below are 10 ticking time bombs we routinely uncover in New York Contractors General Liability (CGL) and Umbrella policies—issues that can turn what looks like solid coverage into a financial catastrophe.
1. Employee Injury Exclusion
At first glance, this exclusion seems logical—after all, workers’ compensation is meant to handle employee injuries. The problem arises when an employee sues a third party (such as an owner or GC), and that party tenders the claim back to you under an indemnification agreement. With an Employee Injury Exclusion, your CGL may refuse to defend or indemnify you, leaving you exposed to contractual liability and defense costs that can easily reach seven figures.
2. Action Over Exclusion
Few exclusions are more dangerous in New York. An Action Over Exclusion bars coverage when an injured employee sues someone other than their employer (owner, GC, construction manager), and that party seeks indemnification from you. Given New York Labor Law §§ 200, 240, and 241, this exclusion can effectively gut your policy on most major construction losses.
3. Height Limitation
Height limitations are increasingly common, especially on policies written for cost rather than protection. A claim involving work above a specified height—10 feet, 20 feet, sometimes even 6 feet—may be entirely excluded. On a state defined by scaffolding, ladders, and high-rise construction, this limitation is a silent killer.
4. Contractors Limitation Endorsement (Scope of Work Restriction)
This endorsement restricts coverage strictly to the operations listed on the policy. If your actual work goes beyond that description—even slightly—the carrier may deny the claim. Contractors often expand services organically over time, unaware their policy has not kept pace. One uninsured task can unravel years of premium payments.
5. “Hard Hammer” Subcontractor Form
A Hard Hammer Subcontractor Endorsement imposes severe conditions on coverage when subcontractors are involved. Missing certificates, improper contracts, or failure to collect additional insured endorsements can result in outright denial. On multi-trade New York job sites, this endorsement creates constant exposure if compliance is not meticulously managed.
6. Territorial Restrictions
Some policies limit coverage to specific states or regions. Contractors operating across the tri-state area—New York, New Jersey, and Connecticut—may assume they are covered everywhere they work. A territorial restriction can invalidate coverage the moment you cross a state line.
7. Exclusion – Temporary, Volunteer, or Casual Workers
This exclusion is especially dangerous for contractors using day laborers, seasonal help, or workers supplied by staffing agencies. If an injured worker is deemed a “temporary” or “casual” employee, the carrier may deny coverage entirely, even if payroll was reported and premiums paid.
8. Umbrella Policy Does Not Follow Form
Many contractors assume their umbrella policy simply extends the limits of the underlying CGL. Not always. If the umbrella does not “follow form,” it may contain broader exclusions or narrower definitions. The result: a catastrophic loss pierces the primary policy, only to find the umbrella offers no protection.
9. Privity Requirements for Additional Insureds
Some policies require direct contractual privity for additional insured status to apply. In real-world construction, contracts often flow downstream in complex ways. Without strict privity, owners or upstream contractors may lose AI protection, triggering indemnity disputes and uninsured exposure.
10. Labor Law Coverage Exclusion
Perhaps the most devastating exclusion of all. A Labor Law Exclusion removes coverage for claims arising under New York Labor Law—the very statute driving the largest construction losses in the state. Contractors are often unaware this exclusion exists until after a scaffold or gravity-related injury occurs.
Why This Matters
Each of these endorsements may be buried deep within a policy form. Individually, they are dangerous. Combined, they can leave a contractor effectively uninsured for the most common and severe New York construction claims. Price-driven insurance shopping often results in policies designed to minimize carrier exposure—not protect your business.
How BGES Group Helps New York Contractors
At BGES Group, we do not sell “off-the-shelf” insurance. We specialize in identifying and eliminating these coverage traps before a claim ever happens. Our team understands New York construction risk, Labor Law exposure, and the contractual realities contractors face daily.
We provide:
- Full policy reviews to identify hidden exclusions and endorsements
- Customized General Liability and Umbrella programs built for New York risk
- Contract and additional insured guidance to protect upstream and downstream relationships
- Proactive service across the New York, New Jersey, and Connecticut markets
Whether you are a trade contractor, GC, or specialty subcontractor, our goal is simple: make sure your insurance actually works when you need it.
Contact BGES Group
If Consider having your policies reviewed before renewal—or before the next job starts.
BGES Group Business Insurance Specialists for New York Contractors Serving the Tri-State Area
📞 Phone: 914-806-5853 – Gary Wallach
📧 Email: bgesgroup@gmail.com
🌐 Website: www.bgesgroup.com
In New York construction, insurance is not about having a policy—it is about surviving the claim. Make sure there are no ticking time bombs hiding in yours.
