New York contractors have been feeling the squeeze of rising liability insurance costs for several years. Despite efforts to control costs, the trend of increasing premiums shows no signs of slowing down. For many contractors, this means not only higher business expenses but also difficulty staying competitive. Understanding the factors behind these rate increases and knowing what steps can be taken to mitigate them are critical for contractors looking to control their overhead.
What Is Driving Liability Rate Increases?
Several factors contribute to the rising cost of contractor liability insurance in New York. These are some of the key drivers:
1. New York Labor Laws 240 and 241 (The Scaffold Law)
New York’s Labor Laws 240 and 241, often referred to collectively as the Scaffold Law, are major contributors to increased liability insurance rates. These laws place absolute liability on contractors and property owners for gravity-related injuries, such as falls from ladders or scaffolding. The Scaffold Law makes it impossible for contractors to defend against certain types of claims, regardless of fault, which leads to costly settlements or verdicts. Insurers, in turn, factor this into the cost of providing coverage, leading to higher premiums.
2. Increased Frequency of Claims
Another factor driving up liability rates is the sheer number of claims being filed. Construction is inherently a high-risk industry, and even with strict safety protocols in place, accidents happen. New York’s busy construction market, especially in areas like Manhattan and Brooklyn, increases the likelihood of accidents, which, when coupled with laws like the Scaffold Law, result in more claims and higher payouts. Insurers pass these costs onto contractors in the form of higher premiums.
3. Rising Legal Costs
The cost of defending against liability claims has also risen. Legal fees in New York are among the highest in the country, and when insurers have to pay large sums for legal defenses, these costs contribute to rate hikes. Prolonged litigation, expert witnesses, and extensive discovery processes can turn even a simple claim into a multi-year legal battle, further driving up costs for insurers.
4. Limited Insurer Participation
New York’s complex legal environment and the frequency of high-value claims have caused some insurers to exit the market or limit their exposure. Companies like Berkshire Hathaway and State Farm have scaled back their offerings for contractors, leaving fewer insurers in the market. This lack of competition drives prices up, as fewer insurers are willing to take on the risk of insuring New York contractors.
What Can Contractors Do to Lower Their Rates?
While the factors driving rate increases may seem beyond a contractor’s control, there are proactive steps that can help reduce premiums.
1. Improve Safety Protocols
Having a robust safety program in place is essential. Insurers will often offer lower rates to contractors with strong safety records. This includes regular safety training for employees, having a full-time safety officer on-site, and maintaining detailed safety logs. By minimizing the risk of accidents, contractors can also reduce the number of claims, which will reflect positively when insurers calculate premiums.
2. Invest in Quality Equipment
Old, faulty, or poorly maintained equipment is often a source of job site injuries. Investing in high-quality, well-maintained tools, scaffolding, and protective gear can reduce the risk of accidents. A reputation for using safe, modern equipment can influence an insurer’s perception of a contractor’s risk level, potentially lowering rates.
3. Review Contracts Carefully
Contractors should ensure that their contracts with property owners, subcontractors, and other parties are structured to reduce liability exposure. This includes ensuring that appropriate indemnity clauses are in place and that subcontractors carry their own liability insurance. Additionally, requiring that subcontractors add contractors as additional insureds on their policies can protect against action over claims.
4. Shop Around for Insurance
Not all insurance providers are created equal. By working with an experienced insurance broker, contractors can shop around for better rates. A broker specializing in New York construction insurance, like BGES Group, can help contractors find coverage tailored to their specific needs and identify opportunities for savings that generalist insurers might overlook.
5. Bundle Insurance Policies
Another way to save is by bundling policies. Combining liability insurance with other coverage needs, such as workers’ compensation or commercial auto insurance, can often result in discounts. Many insurers offer multi-policy discounts, and bundling can simplify the management of policies as well.
How BGES Group Can Help Contractors Lower Their Rates
With the right partner, contractors can navigate the complex insurance landscape and find the best rates and coverage options available. BGES Group, one of New York’s construction insurance specialists, has deep expertise in helping contractors secure the liability coverage they need without breaking the bank.
BGES Group understands the unique challenges facing New York contractors, including the impact of Labor Laws 240 and 241, and works diligently to find insurers who offer competitive rates. Their personalized, boutique-like service ensures that each client receives the attention and support they deserve, from the initial quote to ongoing policy management.
Whether you’re a general contractor, a subcontractor, or a project owner, BGES Group can help you find better coverage options while keeping your costs down. Their team will review your current policies, look for potential savings, and help you implement risk management strategies to keep future rate increases in check.
To learn how BGES Group can help lower your liability insurance rates, contact Gary Wallach today at 914-806-5853 or email bgesgroup@gmail.com.
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By understanding the factors behind rising liability insurance rates and taking proactive steps to mitigate them, New York contractors can control their costs while maintaining the coverage they need. With the support of experts like BGES Group, it’s possible to stay protected without overpaying for insurance. Reach out to Gary Wallach to start exploring your options today.
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.
BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being canceled, losses causing difficulty getting coverage, in the middle of an audit dispute, misclassified payrolls, or whatever your issue. We can help! We have special programs for Auto Services, Contractors (especially in New York), Limousine Services, Logistics Companies, Manufacturers, Recyclers, and Truckers; we can help ANY tri-state business owner. We are considered “Preferred Agents” for this one program that, if we can get you into, their pricing is excellent, offers long-term coverage stability, and can cover multi-state operations. The program takes the hassle out of doing annual audits, too.
If you want to speak with us, call Gary Wallach at 914-806-5853, click here to email, or visit our website.
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