If you’re a contractor in New York, you may have encountered insurance challenges related to the injury to employee exclusion. But what exactly is this exclusion, and how does it affect contractors in the state? In this article, we’ll explore the implications of the injury to employee exclusion and its impact on New York contractors.
In simple terms, the injury to employee exclusion limits or eliminates liability coverage for employee injuries. While this might seem reasonable at first, considering the presence of workers’ compensation to cover injured workers, it’s important to note that workers’ compensation alone may not be sufficient in New York.
New York workers have additional avenues to seek compensation for injuries, thanks to laws like the scaffold law, officially known as Labor Law 240/241. These laws allow workers to go beyond workers’ compensation and pursue further compensation for their injuries.
Now, you might wonder why insurance policies include exclusions for injured workers if they can face additional claims. The reason is that these claims can be extremely costly. Insurance companies carefully word their contracts to ensure they receive adequate premiums to cover the risks involved.
If a general contractor or building owner informs you that your policy is inadequate due to an injury to employee exclusion or an action-over exclusion, you may need to consider obtaining a new policy or forfeit the job. However, it’s essential to understand that the new policy will likely come at a significantly higher cost compared to your current one, which excludes action-over coverage.
The magnitude of the cost increase depends on factors such as the type of work you do and your company’s gross sales. On average, you can expect a 25% increase in general liability premiums. However, if you have a $2,500 Artisan Contractors Policy, the increase could be as high as 1000%. Yes, you read that correctly. Policies with action-over coverage in New York City typically start around $25,000, though contractors in upstate New York face less severe premium increases.
As a contractor, the prospect of affording such a policy may seem daunting, especially since your bids were based on your previous insurance premiums. The good news is that there may be room for negotiation with the party requesting the exclusion’s removal from your policy.
Why would the general contractor or building owner be willing to negotiate? In many cases, your initial bid was lower than your competitors because your insurance costs were significantly lower.
If your policy is being rejected, here’s a simple plan you can follow:
- Engage in a conversation with the party denying your coverage.
- Request a reasonable amount of time to address the issue, as obtaining a new general liability policy typically takes 7-10 days.
- Explore the possibility of renegotiating the contract to account for the increased insurance premium.
- Obtain an insurance requirement sheet that clearly outlines all the required limits.
- Once you’ve taken these initial steps, reach out to GRBM to initiate a conversation and receive a rough estimate of your new insurance premiums. Discuss the estimated premiums with the party denying your coverage. Finally, gather your insurance paperwork, including signed applications, policies, and certificates of insurance from the past five years.
While obtaining the right insurance coverage comes at an increased cost, it also opens doors to new opportunities and expanded job prospects that you might otherwise miss out on. From a cost perspective, it may not always seem beneficial since the new insurance rate applies to every new job. However, the enhanced coverage provides crucial protection for your business in the event of an accident that results in an action-over claim.
If you’re ready to begin the process, please reach out to us at GRBM. We’re happy to have a conversation,
