If you’re a contractor working in New York, you’ve likely heard the term “Action Over Claim” tossed around by insurance brokers, attorneys, or project owners. But many contractors don’t fully understand what it means—until it becomes a serious and expensive problem. In a state known for its strict labor laws and high litigation rates, Action Over claims can significantly impact your business, your insurance costs, and even your ability to win future jobs.
Let’s break down what Action Over claims are, why they matter, and how they can affect your operation as a New York contractor.
What Is an “Action Over” Claim?
An Action Over claim arises when an injured worker sues a third party (usually a property owner or general contractor), and that third party then “actions over” against the injured worker’s employer—typically a subcontractor—to recover damages.
Here’s the key point: Even though workers’ compensation laws generally prevent employees from suing their own employer directly, New York’s Labor Law creates exceptions that allow other parties to bring the employer back into the lawsuit.
This is most common under New York Labor Law Sections 200, 240(1), and 241(6)—especially Labor Law 240, often referred to as the “Scaffold Law,” which imposes absolute liability on owners and general contractors for gravity-related injuries.
Why Action Over Claims Are a Big Deal
For contractors, Action Over claims can be devastating for several reasons:
- Circumvents Workers’ Comp Protection: Normally, workers’ compensation is your exclusive remedy. But Action Over claims reopen liability exposure.
- Triggers General Liability Policies: These claims often fall under your General Liability (GL) or Umbrella policies, not Workers’ Comp.
- Drives Up Insurance Costs: Carriers view Action Over exposure as high risk, especially in New York.
- Contractual Risk Transfer: Many contracts require subcontractors to indemnify owners and GCs, increasing your exposure even further.
In short, even if you did nothing wrong, you can still be pulled into a lawsuit and face substantial financial consequences.
How Action Over Claims Typically Work
- An employee of a subcontractor is injured on a job site.
- The employee collects Workers’ Compensation benefits from their employer.
- The employee sues the property owner and/or general contractor.
- The owner or GC files a third-party lawsuit against the subcontractor (the injured worker’s employer).
- The subcontractor is now back in the case—this is the “Action Over.”
Three Real-World Examples
Example 1: The Falling Worker
A roofing subcontractor’s employee falls from a ladder while working on a commercial building in Manhattan. The worker suffers serious injuries and collects Workers’ Compensation.
The worker then sues the building owner and general contractor under Labor Law 240(1). Because of the Scaffold Law, the owner and GC are held strictly liable—even if they weren’t negligent.
The GC then files an Action Over claim against the roofing subcontractor, alleging:
- Failure to provide proper safety equipment
- Breach of contract (indemnification clause)
Result: The subcontractor is pulled into the lawsuit and their General Liability and Umbrella policies are triggered, potentially leading to a large payout.
Example 2: The Improper Safety Setup
An electrical subcontractor’s employee is injured when scaffolding collapses. The employee files for Workers’ Compensation and then sues the general contractor and property owner.
The general contractor claims that the subcontractor:
- Improperly assembled the scaffold
- Failed to follow safety protocols
They initiate an Action Over claim to shift liability.
Result: Even though the employee cannot sue their employer directly, the subcontractor is now defending a third-party claim and may be responsible for damages, legal fees, and indemnification obligations.
Example 3: The Multi-Trade Job Site Injury
On a large construction site in Brooklyn, a laborer working for a masonry subcontractor trips over debris left by another trade and suffers a serious injury.
The worker sues the owner and general contractor. The general contractor then brings Action Over claims against multiple subcontractors, including the injured worker’s employer, arguing:
- Poor site safety coordination
- Failure to maintain a clean work area
Result: Multiple subcontractors get pulled into litigation, even those indirectly involved. Insurance policies across several trades are triggered, creating a complex and costly legal battle.
How to Protect Your Business
Action Over claims are difficult to eliminate entirely in New York, but there are ways to manage and reduce your exposure:
1. Strong Contracts
Make sure your contracts are carefully reviewed. Pay close attention to:
- Indemnification clauses
- Additional insured requirements
- Scope of work definitions
Poorly written contracts can dramatically increase your liability.
2. Proper Insurance Coverage
Ensure you have:
- Adequate General Liability limits
- Sufficient Umbrella/Excess coverage
- Coverage that does NOT exclude Action Over claims
Some carriers specifically limit or exclude this exposure—this is critical to review.
3. Risk Transfer
Always require your subcontractors to:
- Name you as an Additional Insured
- Provide proper certificates of insurance
- Carry adequate limits
Risk transfer is one of your strongest defenses.
4. Safety Programs
A strong safety culture can reduce the likelihood of accidents and claims:
- Regular safety meetings
- Proper equipment training
- Site inspections and documentation
5. Work with Specialists
New York is a unique and challenging insurance environment. Working with a broker who understands Action Over exposure is essential to structuring proper protection.
Final Thoughts
Action Over claims are one of the most significant liability risks facing New York contractors today. They blur the line between Workers’ Compensation and General Liability, often pulling subcontractors into lawsuits they thought they were protected from.
Understanding how these claims work—and proactively managing your contracts, insurance, and job site practices—can mean the difference between a manageable incident and a major financial setback.
BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health. Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.
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If you want to speak with us,
Contact: Gary Wallach at 914-806-5853,
Email: bgesgroup@gmail.com
Website: www.bgesgroup.com
Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538