New York’s Labor Laws 240 and 241, often called the “Scaffold Law,” impose strict liability on general contractors and property owners for elevation-related injuries suffered by workers. This means that if a worker falls from a height or is struck by a falling object due to inadequate safety measures, the general contractor and property owner can be held liable—even if they were not directly negligent.
For New York contractors, this law makes obtaining the right liability insurance crucial. Without proper coverage and contractual protections in place, a single claim can lead to devastating financial consequences. Let’s examine two scenarios involving a subcontractor’s employee falling off a ladder on a job site and how the presence (or absence) of an insurance and hold harmless agreement impacts the lawsuit and liability.
Scenario 1: The General Contractor Had a Signed Insurance and Hold Harmless Agreement
A homeowner hires a general contractor (GC) to remodel their home. The GC, in turn, hires a subcontractor (SC) to handle electrical work. The SC’s employee, while working on the project, falls from a ladder and sustains serious injuries.
Who Can the Injured Worker Sue?
Since this is a work-related injury, the subcontractor’s workers’ compensation insurance will cover the employee’s medical bills and lost wages. However, under Labor Law 240, the worker can sue the general contractor and the homeowner because they are legally responsible for providing a safe work environment.
How Does the Insurance and Hold Harmless Agreement Protect the GC?
If the GC required the SC to sign a hold harmless and insurance agreement, the subcontractor is contractually obligated to:
1. List the GC as an Additional Insured on their General Liability policy.
2. Defend and Indemnify the GC in case of a claim resulting from their work.
3. Provide Primary and Non-Contributory Coverage, meaning the SC’s insurance policy pays first before the GC’s policy is triggered.
When the injured worker sues the GC and homeowner, the GC can tender the claim to the SC’s insurance company, shifting the financial responsibility to them. This helps the GC avoid out-of-pocket costs, higher insurance premiums, or being stuck with liability.
Scenario 2: The General Contractor Did NOT Have a Signed Insurance and Hold Harmless Agreement
Now, let’s assume the GC failed to obtain a hold harmless and insurance agreement from the SC. The same worker falls off the ladder and files a lawsuit under Labor Law 240 against the GC and the homeowner.
Who Can the Injured Worker Sue?
Just like in the first scenario, the injured worker can sue both the GC and homeowner, regardless of fault. Since Labor Law 240 imposes strict liability, they don’t have to prove negligence—only that the injury resulted from an elevation-related risk.
What Happens Without a Hold Harmless Agreement?
1. The GC Cannot Shift Liability to the SC – Without a signed agreement, the GC cannot force the SC’s insurance company to cover the claim. The GC’s own General Liability and Umbrella Liability policies will have to respond, leading to potential premium increases or even policy cancellation.
2. The GC May Have to Pay Out of Pocket – If the insurance coverage is insufficient, the GC might have to cover legal fees and settlements personally.
3. The GC’s Insurer May Sue the SC – If the GC’s insurer ends up paying, they may attempt to recover costs from the SC through subrogation, but this is often a long and uncertain process.
Without a contractual agreement, the GC is at much higher risk financially. This is why it is critical for GCs to require all subcontractors to sign hold harmless and insurance agreements before starting work.
How BGES Group Can Help New York Contractors Obtain the Right Coverage
Navigating New York’s strict labor laws and complex insurance landscape can be challenging. This is where BGES Group comes in. As a specialist in New York construction insurance, we help contractors secure the right coverage to protect themselves from costly Labor Law 240 and 241 claims.
Why Contractors Turn to BGES Group
1. Access to Top-Tier Insurance Carriers – Many insurers are leaving the New York construction market due to the high risk. BGES Group works with specialty carriers that still provide coverage for GCs and subcontractors.
2. Customized Liability Insurance Solutions – We ensure our clients have:
• General Liability with Labor Law Coverage
• Umbrella/Excess Liability for additional protection
• Workers’ Compensation coverage that meets New York State requirements
3. Hold Harmless and Insurance Agreement Guidance – We help contractors draft and implement strong contractual agreements with their subcontractors to reduce liability exposure.
4. Competitive Pricing and Expert Advice – With years of experience in the industry, we negotiate the best coverage at the most competitive rates.
5. Fast, Responsive Service – When an issue arises, you need an insurance broker who acts fast. We pride ourselves on providing boutique-style service with personalized attention.
Protect Your Business Today—Contact BGES Group
Don’t wait until a lawsuit threatens your business. Make sure you have the right coverage and risk management strategies in place today.
Contact BGES Group for a Free Consultation
• Gary Wallach, Construction Insurance Expert
• Phone: 914-806-5853
• Email: bgesgroup@gmail.com
• Website: bgesgroup.com
BGES Group is the go-to insurance specialist for New York contractors. We ensure you have the best liability protection available, so you can focus on growing your business with peace of mind. Call us today!