Renovating Your New York Home? Here’s What You Need to Know About Liability Insurance If Acting as Your Own General Contractor

Extensive home renovations can be exciting but also come with significant challenges—especially if you decide to act as your own general contractor to save money and expedite the project. While managing the project yourself might seem like a smart financial move, it also exposes you to serious legal and financial risks. One of the most critical aspects of taking on this role is understanding your liability and securing the right insurance.

Here’s what New York homeowners need to know before stepping into the role of general contractor.

Labor Laws 240 and 241: The Risks You Face

New York’s Labor Laws 240 and 241, commonly referred to as the “Scaffold Law,” impose strict liability on property owners and general contractors for injuries sustained by workers performing certain construction, demolition, or repair tasks. These laws are unique because they create absolute liability—the injured worker does not need to prove negligence.

For one- and two-family homeowners, there is typically an exemption under these laws. However, if you act as your own general contractor, you lose this exemption, meaning you are legally treated as a general contractor and become liable for labor law claims.

For example, if a worker falls from a ladder or scaffold while working on your home, you could be held responsible for medical bills, lost wages, and damages, regardless of whether you were directly at fault. These claims are notoriously dangerous because they can result in substantial financial penalties.

Insurance Requirements for Subcontractors

When hiring subcontractors, it’s essential to ensure they carry adequate insurance to protect you from potential claims. At a minimum, subcontractors should have:

1. General Liability Insurance – Covers property damage or injuries caused by their work.

2. Workers’ Compensation Insurance – Provides coverage for injuries sustained by their employees.

3. Umbrella Liability Insurance – Offers additional coverage beyond the limits of their primary liability policies.

Additionally, subcontractors should name you as an additional insured on their policies. This ensures that their insurance extends to you, offering an extra layer of protection.

Coverage Gaps Under General Contractor Liability Policies

If you act as your own general contractor and purchase liability insurance, most policies will have strict requirements for subcontractor coverage. Insurance companies typically mandate that:

• Subcontractors carry their own general liability and workers’ compensation insurance.

• Their policies meet minimum coverage limits.

If your subcontractors fail to meet these standards, your liability policy could exclude coverage for claims arising from their work. This creates significant exposure, as any gaps in coverage could leave you personally liable for claims.

The Safer Option: Hiring a Licensed Contractor

While managing your project might seem cost-effective, the risks associated with acting as your own general contractor often outweigh the potential savings. Hiring a licensed contractor comes with several key benefits:

1. Legal and Financial Protection – Licensed contractors carry their own liability and workers’ compensation insurance, significantly reducing your exposure to claims.

2. Expertise and Efficiency – Professionals are well-versed in managing subcontractors, ensuring timelines are met, and addressing unforeseen issues.

3. Accountability – Contractors assume responsibility for meeting safety and legal standards, which can provide peace of mind.

4. Streamlined Insurance – You won’t need to worry about verifying subcontractor coverage or navigating complex liability requirements.

Why BGES Group Is Here to Help

At BGES Group, we understand the complexities of liability insurance and construction-related risks. While we do not offer liability coverage for homeowners acting as general contractors, we can provide valuable guidance to help you make informed decisions about your project.

Our team of experts specializes in contractor insurance and can:

• Explain the risks of acting as your own general contractor.

• Offer insights on subcontractor insurance requirements.

• Help you understand New York’s labor laws and their implications.

For expert advice, contact Gary Wallach at BGES Group today. Call 914-806-5853 or email bgesgroup@gmail.com.

Renovating your home is a big undertaking—don’t let unexpected liabilities ruin your plans. Let BGES Group help you navigate the risks and protect what matters most.

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