For New York contractors, protecting yourself against risk is already complicated. Labor Law 240/241 exposures, rising insurance costs, and tough compliance requirements can make running a construction business feel like navigating a minefield. But many contractors are unaware of one of the biggest hidden traps inside surplus line Commercial General Liability (CGL) policies: the hard hammer clause.
This clause directly affects how claims are handled when subcontractors fail to meet strict insurance requirements. If you’re not paying attention, your company could be left exposed—without coverage—right when you need it most.
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What Is a Hard Hammer Clause?
A “hard hammer clause” is a condition in surplus line CGL policies that says if you don’t enforce subcontractor insurance requirements exactly as written, your coverage may be denied.
Most contractors assume their policy will respond to claims no matter what. But in reality, the insurer can refuse coverage if a subcontractor you hired isn’t properly insured—even if the accident wasn’t your fault.
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Standard Subcontractor Insurance Requirements
Almost every surplus line CGL policy in New York requires general contractors to flow down strict insurance requirements to their subcontractors. At a minimum, subcontractors must provide:
• $2 million in liability coverage.
• General contractor listed as Additional Insured on both ongoing and completed operations.
• Primary & Non-Contributory wording – making the subcontractor’s policy respond first.
• Waiver of Subrogation – preventing the sub’s insurer from going after the GC’s policy.
• Labor Law Coverage – absolutely critical in New York due to strict liability statutes.
• Workers’ Compensation Insurance – required for every subcontractor with employees.
These requirements are not “suggestions”—they are mandatory conditions under most surplus line CGL policies.
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Where the Trap Springs
Here’s the danger: if a subcontractor causes an accident and is not in full compliance with the hold harmless agreement and insurance requirements, the GC’s insurer can refuse to defend or indemnify the GC.
That means the GC is on the hook—for legal defense, settlements, and judgments. With New York Labor Law claims regularly reaching into the millions, this is a risk that could destroy even a well-established contractor.
For example:
• A subcontractor’s employee falls from scaffolding.
• The subcontractor has insurance, but the GC was never listed as an Additional Insured.
• The GC’s CGL policy has a hard hammer clause.
• The claim comes in—and the GC’s insurer denies coverage.
The GC ends up facing a multi-million-dollar Labor Law claim alone.
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Why This Hits New York Contractors Hard
New York has some of the strictest construction liability laws in the country. Labor Law 240 (the Scaffold Law) makes GCs and owners absolutely liable for gravity-related injuries, regardless of fault.
That means if your subcontractor slips up—even on paperwork—you could be left without coverage. And surplus line carriers know it, which is why they write policies with these hard hammer conditions.
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How to Protect Yourself
1. Tighten Your Subcontract Agreements – Make sure every subcontractor signs a contract with proper hold harmless and insurance requirements.
2. Collect & Verify Certificates of Insurance – Don’t just collect them; verify Additional Insured, Primary & Non-Contributory, and Waiver of Subrogation endorsements.
3. Audit Subcontractors Regularly – Insurance can lapse. A certificate from six months ago is useless if coverage was canceled last week.
4. Work With a Specialist Broker – Most agencies don’t fully explain these policy traps. You need a broker who understands New York construction insurance and Labor Law exposures.
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Why Contractors Trust BGES Group
At BGES Group, we specialize in New York construction insurance and know the traps hidden inside surplus line policies. We’ve seen too many contractors blindsided by hard hammer clauses and uncovered claims.
Here’s what makes us different:
• We’re not a big-box agency—we’re a responsive, family-run team that actually answers calls and gets problems solved fast.
• We proactively shop your policies—making sure you’re not overpaying for limited coverage.
• We help enforce subcontractor compliance—so you’re not left exposed when a claim happens.
• We’re trusted by 125+ five-star Google reviews from contractors who rely on us to protect their businesses.
When you work with BGES Group, you don’t just get a policy—you get a partner who cares about your survival and success in New York’s toughest construction environment.
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Contact BGES Group Today
Don’t wait until a claim hits to find out your policy won’t respond. Protect yourself now.
BGES Group
📍 Specialists in New York Construction Insurance
📞 Gary Wallach – 914-806-5853
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Final Word
Hard hammer clauses in surplus line CGL policies aren’t going away. They’re designed to shift risk back onto contractors who don’t enforce subcontractor compliance. But with the right guidance, you can protect your business, stay compliant, and avoid financial disaster.
BGES Group can help you do exactly that.