In the bustling, highly regulated world of New York construction, it’s not enough for artisan contractors — whether they’re plumbers, electricians, masons, drywall installers, or carpenters — to simply have insurance. The type of insurance policy, the way it’s written, and the limits it carries are all under close scrutiny by municipalities across New York State. Too often, contractors find themselves rejected from jobs or denied permits because their liability policy doesn’t meet the specific, stringent requirements enforced by local governments.
In this article, we’ll unpack why municipalities reject certain artisan contractors’ liability policies, what contractors should look for to stay compliant, and how working with a specialist can make all the difference.
⸻
Understanding the Problem: Not All Policies Are Created Equal
Many artisan contractors assume that any general liability policy will suffice for municipal jobs or projects requiring permits. Unfortunately, this is a costly misconception. New York municipalities typically require very specific insurance language, coverages, and endorsements to protect themselves and the public from financial loss in the event of an accident, injury, or property damage on a job site.
Here’s where the disconnect happens:
• Cheap, off-the-shelf policies often exclude key coverages.
• Certain insurance carriers issue policies without the proper endorsements municipalities demand.
• Some policies have unacceptable limitations, like subcontractor exclusions or specific work restrictions.
• Inadequate policy limits that fall below municipal standards.
When a municipality reviews a Certificate of Insurance (COI) or requests a full policy, these deficiencies quickly come to light, resulting in a rejection of the contractor’s insurance and often halting work before it can even begin.
⸻
Common Reasons for Municipal Policy Rejections
Let’s dive into some of the most frequent reasons New York municipalities reject artisan contractors’ liability insurance policies:
1. Lack of Proper Additional Insured Endorsements
Municipalities routinely require to be named as an Additional Insured on a contractor’s policy for both ongoing and completed operations. If your policy doesn’t have the correct ISO forms (like CG 2010 04/13 and CG 2037 04/13 or their equivalents), your COI will be denied.
Many lower-cost policies will either exclude Additional Insured coverage or provide it in a restrictive form that only covers certain types of claims — a dealbreaker for New York municipalities.
⸻
2. Inadequate Policy Limits
Most artisan contractors purchase liability policies with limits of $1 million per occurrence and $2 million aggregate, thinking it’s sufficient. However, for municipal work, higher limits are often required — sometimes $5 million or more — either on the base policy or through an Excess (Umbrella) policy.
If your limits don’t meet the specifications in the municipal contract or permit application, your insurance will be rejected on the spot.
⸻
3. Subcontractor Exclusions
Many artisan contractors hire subcontractors for portions of their work, whether it’s electrical, HVAC, or framing. Some general liability policies contain a Subcontractor Warranty or Exclusion, which states that any work performed by a subcontractor is not covered unless that subcontractor meets strict insurance requirements.
Municipalities frown on policies with these exclusions because it increases their exposure in the event of an incident. If your policy includes these, expect a red flag during any insurance review.
⸻
4. Lack of a Waiver of Subrogation
A Waiver of Subrogation prevents your insurance carrier from seeking reimbursement from the municipality in case of a claim. New York municipalities commonly require this to avoid becoming a financial target in the event of an accident. If your policy lacks this waiver, your insurance won’t be accepted.
⸻
5. Poor Carrier Ratings
New York municipalities typically require insurance to be placed with a carrier that has an A- or better financial strength rating from A.M. Best. Policies from unrated or poorly rated carriers — often offered at a lower premium — are automatically rejected to protect the municipality from dealing with an insolvent insurer in the event of a claim.
⸻
6. Inappropriate Classifications or Business Descriptions
If your liability policy’s classification doesn’t accurately reflect the type of work you perform, it can cause major problems. Municipalities cross-reference the COI and policy with the type of permit or contract issued. A mismatch can lead to an outright rejection.
⸻
The Cost of Non-Compliance
Failing to meet municipal insurance requirements can lead to:
• Job delays or cancellations
• Permit denials
• Inability to bid public projects
• Fines and penalties
• Potential legal liability if an incident occurs while uninsured
It’s a frustrating and expensive problem for contractors — especially those who unknowingly purchased inadequate insurance from agencies unfamiliar with New York construction regulations.
⸻
How BGES Group Solves the Problem for New York Contractors
At BGES Group, we specialize in construction insurance for artisan contractors across the Tri-State area (New York, New Jersey, and Connecticut). We understand the intricacies of New York municipal insurance requirements because we work with them every day.
Our team ensures your insurance program is properly structured from day one, with:
✅ Correct Additional Insured endorsements
✅ Proper policy limits and Excess Liability options
✅ No subcontractor exclusions (or properly structured subcontractor agreements if applicable)
✅ Waivers of Subrogation
✅ A-rated or better carriers
✅ Accurate class codes and business descriptions
We’ll review your existing policies for free, identify problem areas, and offer solutions tailored to your specific trade, contract requirements, and budget.
If you’re an artisan contractor tired of getting your insurance rejected — or worried it might happen — we’re your go-to resource.
⸻
Contact BGES Group Today
Stop wasting time and money on insurance that doesn’t work for New York municipalities. Let the specialists handle it.
Contact Gary Wallach at BGES Group:
📞 914-806-5853
We’re not just insurance brokers — we’re construction insurance problem-solvers. Let’s protect your business and keep your projects moving forward.