Understanding Contractual Liability Under a New York Contractor’s General Liability Insurance Policy

Contractors in New York face numerous challenges and risks in their daily operations, especially when working with subcontractors. Ensuring that all parties involved are adequately protected is crucial, and this is where a General Liability Insurance policy becomes essential. One of the critical components of such a policy is contractual liability, which can cover the contractor for certain liabilities assumed in a contract. This article will delve into how contractual liability works under a New York contractor’s General Liability Insurance policy, particularly in relation to subcontractors, and provide a practical example of an “action over” claim.

#### What is Contractual Liability?

Contractual liability refers to the obligations a contractor assumes in a contract that could result in liability. This often comes in the form of indemnity or hold harmless agreements where one party agrees to protect another from certain risks. Under a General Liability Insurance policy, contractual liability coverage helps manage these risks by covering the liabilities a contractor assumes through contractual agreements.

#### Importance of Insurance and Hold Harmless Agreements

For New York contractors, having insurance and hold harmless agreements in place when dealing with subcontractors is not just a good practice—it’s essential. These agreements ensure that subcontractors are held accountable for their actions and that the primary contractor is protected from potential liabilities arising from the subcontractor’s work. By requiring subcontractors to carry their own insurance and include the contractor as an additional insured, contractors can transfer some of the risks associated with their projects.

#### Example of an “Action Over” Claim

An action over claim is a scenario where an injured subcontractor’s employee sues the general contractor, despite receiving workers’ compensation benefits. Let’s break down how this works with an example:

1. **Injury on the Job Site:**

  Imagine a subcontractor’s employee is injured on the job site due to a fall from a scaffold. The employee files a claim and receives workers’ compensation benefits from the subcontractor’s workers’ compensation insurance.

2. **Lawsuit Against the Contractor:**

  Despite receiving workers’ compensation, the injured employee decides to sue the general contractor for additional damages, claiming that the contractor’s negligence contributed to the accident. This is where the “action over” claim comes into play.

3. **Contractual Liability and Hold Harmless Agreements:**

If there is a hold harmless agreement in place between the contractor and the subcontractor, the general contractor can tender the lawsuit back to the subcontractor’s liability insurance policy. The subcontractor’s General Liability Insurance policy would then respond to the claim, covering the general contractor’s liability arising from the lawsuit.

This example highlights the importance of having well-drafted hold harmless agreements and ensuring that subcontractors carry adequate liability insurance. Without these protections, the general contractor could face significant financial exposure from such lawsuits.

#### Practical Steps for New York Contractors

To protect themselves effectively, New York contractors should take the following steps when dealing with subcontractors:

1. **Insurance Requirements:**

  Require subcontractors to carry their own General Liability Insurance and workers’ compensation insurance. Additionally, ensure that subcontractors name the contractor as an additional insured on their policies.

2. **Hold Harmless Agreements:**

  Include clear hold harmless and indemnification clauses in all subcontractor agreements. These clauses should specify that the subcontractor will defend and indemnify the contractor against any claims arising from the subcontractor’s work.

3. **Regular Review:**

  Regularly review and update contracts and insurance requirements to ensure they comply with current laws and industry standards. Work with an insurance specialist to ensure all potential risks are covered.

#### How BGES Group Can Assist

Navigating the complexities of contractual liability and ensuring adequate protection requires expertise and personalized attention—this is where BGES Group excels. As one of New York’s premier construction insurance specialists, BGES Group operates like a mom-and-pop boutique, offering personalized service to select accounts. Unlike large agencies that manage thousands of accounts, BGES Group focuses on providing select accounts with responsive, reliable, and immediate service without charging extra ridiculous service fees.

Gary Wallach and his team understand the unique needs of New York contractors and can help them secure the necessary coverage to protect their businesses. By working closely with contractors, BGES Group ensures that all potential risks are covered, including those arising from subcontractor relationships. This includes helping contractors draft and review insurance and hold harmless agreements to ensure they are adequately protected.

For contractors looking to safeguard their operations against potential liabilities, BGES Group is the ideal partner. Call Gary Wallach at 914-806-5953 for expert guidance and support in obtaining the right General Liability Insurance policy that includes comprehensive contractual liability coverage. BGES Group’s personalized approach ensures that every client receives the attention and tailored solutions they need to thrive in New York’s competitive construction industry.

By partnering with BGES Group, New York contractors can rest assured that they have a dedicated team looking out for their best interests. This level of personalized service and commitment to client success sets BGES Group apart from the large agencies that service thousands of accounts. If you want responsive, reliable, and trustworthy insurance services without ridiculous service fees, contact Gary Wallach at 914-806-5853 today.

Posted in Uncategorized.

Leave a Reply

Your email address will not be published. Required fields are marked *