In the highly regulated and scrutinized world of New York construction, contractors often find themselves in difficult situations when their general liability and excess liability policies fail to meet the stringent insurance requirements imposed by general contractors (GCs) or building owners. These requirements are typically enforced through third-party screening services that scrutinize coverage details and exclusions, often rejecting policies that do not meet their standards.
This article explores what contractors can do when they face such challenges and how they can ensure compliance with screening company requirements.
Understanding the Common Insurance Gaps
Many contractors assume that having a general liability policy is enough to satisfy contractual obligations, only to discover that their policy contains exclusions or conditions that make it unacceptable to a building owner’s risk management team. Here are some of the most common issues that can cause rejection:
- Independent Contractor Hard Hammer Clause – This clause can stipulate that if a contractor uses subcontractors (subs) who do not carry specified insurance limits and coverage, the primary contractor may have no coverage under their own policy.
- Temporary or Leased Employee Exclusions – Many policies exclude coverage for injuries sustained by temporary or leased workers, creating a significant coverage gap for contractors who rely on labor staffing firms.
- Action Over Exclusions – These exclusions bar coverage for claims made by injured workers who file third-party actions against building owners or GCs, making the policy non-compliant with many owner requirements.
- Primary and Non-Contributory Wording – Some policies lack the specific language required to confirm that the insured’s coverage is primary and non-contributory, leading to rejection by screening services.
- Waiver of Subrogation Issues – Building owners and GCs often require that a contractor’s policy includes a waiver of subrogation in favor of the project’s stakeholders, preventing the insurer from seeking recovery from them in the event of a claim.
- Excess Liability Policy Compliance – Some screening services require that excess liability policies follow form, meaning they must provide coverage consistent with the underlying general liability policy.
Steps New York Contractors Can Take to Comply
If a contractor discovers that their policy does not meet the requirements imposed by a GC or building owner, they have several options to resolve the issue:
1. Work with an Experienced Insurance Broker
An insurance broker who specializes in New York construction insurance can identify gaps in coverage and help secure a policy that meets all necessary requirements. Brokers with experience in the industry, such as BGES Group, have relationships with carriers that offer policies specifically designed to address these compliance issues.
2. Request Policy Endorsements
In many cases, coverage gaps can be addressed by adding endorsements to an existing policy. For example:
- A hard hammer clause may be modified to provide more flexibility for contractors who do not hire subs.
- Temporary worker exclusions may be removed through negotiation with the insurer.
- Action-over exclusions may be eliminated or adjusted to provide the necessary coverage.
3. Explore Alternative Insurance Carriers
Some insurance carriers simply do not offer the flexibility that New York contractors need. If an insurer refuses to modify a policy to meet compliance requirements, switching to a different carrier that specializes in construction insurance may be the best solution.
4. Obtain a Standalone Excess Liability Policy
If an excess liability policy does not meet a building owner’s requirements, a contractor can consider purchasing a standalone excess policy that aligns with the underlying coverage. This can help ensure compliance with contractual obligations.
5. Obtain a Labor Law-Compliant Policy
New York’s Labor Laws place strict liability on contractors and property owners for worker injuries. Ensuring that a liability policy explicitly covers these risks—without broad exclusions—can help contractors avoid compliance issues.
6. Maintain Proper Documentation for Screening Services
Sometimes, screening service rejections result from documentation errors or misunderstandings rather than actual coverage deficiencies. Contractors should ensure they provide clear, accurate Certificates of Insurance (COIs) and additional insured endorsements that explicitly state compliance with contractual requirements.
7. Consider Purchasing a Wrap-Up Policy
If a contractor is working on a larger project, they may be able to participate in a Contractor Controlled Insurance Program (CCIP) or Owner Controlled Insurance Program (OCIP). These wrap-up policies provide coverage for all contractors and subcontractors on a project, ensuring compliance with insurance requirements.
The Role of BGES Group in Helping Contractors Secure the Right Coverage
BGES Group is one of New York’s leading construction insurance specialists, helping contractors navigate the complex world of liability insurance requirements. With a deep understanding of the industry’s challenges, BGES Group provides solutions tailored to each contractor’s unique needs.
- Custom Insurance Solutions: We work with multiple insurance carriers to find the right coverage that meets compliance standards while remaining cost-effective.
- Policy Review & Gap Analysis: Our experts review existing policies to identify exclusions and limitations that could cause compliance issues.
- Endorsement Negotiation: We negotiate with insurers to secure the necessary policy modifications.
- Expedited Compliance Assistance: We help contractors quickly obtain the proper documentation needed to satisfy screening service requirements.
Contact BGES Group Today
If you are a New York contractor struggling with insurance compliance issues, BGES Group can help. Contact us today to discuss your insurance needs and get a policy that meets your general contractor’s or building owner’s requirements.
BGES Group
Website: www.bgesgroup.com
Phone: (914) 806-5853 – Gary Wallach
Email: info@bgesgroup.com
Don’t let insurance gaps put your business at risk—partner with BGES Group to secure the right coverage and keep your projects moving forward!