General contractors Insurance requirements in New York City

General contractors Insurance requirements in New York City
Written by
Lisa Mercurio
Published on
June 16, 2024
Read time
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     General contractors in New York City must adhere to specific insurance requirements. These rules protect contractors and clients in case of accidents, damages, or liabilities during construction. The rules are in place for the safety and security of both parties involved.

     They ensure protection for everyone if any unforeseen circumstances occur. Contractors and clients can rely on these rules to provide a sense of security during the construction process. The main types of insurance required include:

1.General Liability Insurance:

     This is the most basic form of insurance required for general contractors. It covers bodily injury, property damage, and personal and advertising injury that might occur during operations. New York City usually needs general liability insurance with a minimum coverage amount, which depends on the project's size.

Action Over insurance policy:

     When an injury occurs, the employer pays for their medical expenses. But if someone else caused the accident, the employer or their insurance company might sue that person. This essentially recovers costs that the workers' compensation claim paid out.

     NYC homeowners should be cautious when hiring a general contractor without insurance to prevent possible risks. This is particularly important under New York's Labor Laws 240 and 241. Adequate insurance coverage is crucial to manage the financial risks associated with bodily injury claims and action over cases.

Cost of the Action Over coverage and how it affects the cost:

     A General Liability policy with "action over" coverage can cost much more than a regular GL policy. This is mainly because "action over" coverage provides extra liability protection. "Action over" coverage gives more liability protection.

     An employee benefits from being injured, receiving workers' compensation, and suing another party for the injury. This other party could be a property owner or contractor. The third party can then seek indemnification from the general contractor.

     The expensive "action over" insurance is because of strict labor laws in New York. These laws are particularly stringent for construction workers. One such law is the Scaffold Law (NY Labor Law 240 & 241).

     These laws hold the contractor or property owner accountable, even if they are not to blame. This could lead to significant financial payouts.

     Insurance companies often do not provide coverage for New York contractors. If they do, they will charge much more for policies that cover "action over" without exclusions for NY Labor laws.

     Contractors need to know about the extra insurance costs in places like New York with specific laws. Considering these factors when working there is important. We recommend regular policy reviews with an experienced agent. The regular Accord form doesn't provide the info needed to check if your contractor has the correct insurance policy.

     This will help ensure you have the correct coverage. Also, it will help you understand any exclusions or restrictions.

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2.Workers' Compensation Insurance:

     New York State law requires that all employers, including contractors, carry workers' compensation insurance. Workers' compensation helps employees pay for medical bills and some lost wages if they are injured or become ill due to work.

3.Disability Benefits Insurance:

     Contractors in New York must also provide disability benefits coverage, in addition to workers' compensation. This insurance covers off-job injuries and illnesses of employees.

4.Commercial Auto Insurance:

     The contractor must have commercial auto insurance if they use vehicles for business purposes. This policy covers vehicles owned, leased, or hired by the contractor.

5.Umbrella/Excess Liability Insurance:

     Although not always mandatory, experts often recommend this type of insurance. It provides additional coverage above the limits of the general liability and auto liability policies.

6.Professional Liability Insurance (Errors and Omissions):

     Contractors who provide design or consulting services may need to do this. It covers costs and damages if the contractor gets sued for errors or omissions in the services they provide.

7.Pollution Policy:

     General liability insurance does not cover any claims from dust, lead or asbestos to a neighboring apartment. The Pollution policy covers all the expenses in case of a situation like this.

     The specific requirements can vary based on the contract with the client, the nature of the project, and local laws.

     Contractors in New York City should speak with an insurance expert. This will help ensure they have the correct insurance coverage for their projects.

Important for contractors to have the right insurance in place. This will protect them in case of any accidents or damages that may occur during their projects. Consulting with an insurance expert can help contractors understand their insurance needs better.

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