By Allison McGreal, Vice President, PartnerOne Environmental
PartnerOne Environmental is experienced in writing coverage for producers all over the country, but we receive the most questions and requests on accounts in New York. The amount of activity in this state has created a complicated situation for many carriers – there are areas that are densely populated with a lot of construction! Due to many carriers adding exclusions or other limitations, it is crucial for NY insureds to carry the right coverage from a leading carrier. Let’s take a look at one of the most important considerations for NY businesses, New York Labor Law.
What is New York Labor Law (NYLL) coverage?
In the State of New York, there are laws (Labor Law sections 240 and 241) that allow an injured worker to sue a third party such as a general contractor or property owner. The claims typically involve a person falling from a height or being injured from a falling object. Examples include a fall from a scaffold or ladder or a palate of shingles falling from a roof. A height claim may also include falling from ground level to below grade.
New York Labor Law (NYLL) coverage, also known as Action Over coverage, addresses the contractual liability section within the GL policy form, which leaves the employer vulnerable to suits against their GL policy via the Employers Liability (EL) exclusion. An example of this is when a subcontractor is injured on a jobsite and files a claim against his Workers Compensation carrier, and THEN also files a claim against the General Contractor responsible for hiring the subcontractor. The subcontractor brings the “action over” back to the GC and the exception to the EL exclusion.
The Importance of NYLL Coverage
Failure to have NYLL coverage in the event of a claim can be catastrophic for a business; a large enough loss could even cause the business to close. So what are the advantages of having NYLL coverage?
Win bids
By having this coverage in place, the insured can bid on jobs requiring NYLL coverage without scrambling to find a new carrier. Because they already carry the coverage, they can build the cost into their bids.
Both short-term and long-term savings
Initially it may seem like a good idea to buy the cheapest policy with lesser coverage, but when thinking of your long-term business plan, the ability to win jobs without having to remarket mid-term will add to the gross sales as well as saving time and effort searching for a new carrier mid-term.
Carrier stability
NYLL claims can take years to finalize, so it is important to help your insured place coverage with a financially stable carrier and one that will still be in business in the future. Many insurance carriers don’t have strong financials (A.M. Best rating) or may only dabble in NY risks. They often start writing business in NY State, realize they haven’t adequately priced their book of business, and eventually cease writing accounts in NY. This has happened with several carriers in recent years. PartnerOne Environmental has represented the same A+XV rated carrier for over 15 years.
What does a real NYLL claim look like?
An example of a claim that would fall in this category:
The plaintiff was an employee of the Named Insured, who was hired by a construction company to perform demolition operations. The plaintiff alleged that while working on top of scaffolding and removing nails from the rafters, the wheel of the scaffolding went through a weakened area of the plywood flooring, causing the scaffolding to shift and the plaintiff to fall, causing bodily injury. The claim occurred in September 2014 and didn’t close until August 2020 due to the time it took for discovery, depositions, etc. Ultimately the claim was settled for $675,000.
Fortunately, the insured had purchased NYLL coverage and the claim was settled with only the $10,000 deductible being paid by the insured. A claim of this size could have bankrupted the insured or set them back years by the time the claim was settled. They would have had to hire their own defense and pay the settlement themselves.
Managing NY risk
When looking at writing coverage on NY risks, especially for contractors, there are many factors to consider, including but not limited to:
- Does the insured have 5 years currently valued CGL and Workers Compensation loss runs?
- Where is the insured working in NY? Are they working in the 5 boroughs? Surrounding counties? Long Island? Upstate?
- Do they utilize in-house, qualified, and trained staff or do they hire subcontractors? If the latter, how do they pre-qualify the subs? Do they hire contractors with whom they’ve worked in the past or hire from labor unions? Do they require that subs carry their own insurance for GL and Workers Compensation? If so, what limits do they carry? Do they have a good subcontractor agreement in place to help with risk transfer?
- Does the insured have jobsite safety protocols, including a process specific to fall protection?
- What were the expiring premiums?
Multi-line coverage
There are advantages to writing more than one line with a carrier. Since this situation allows the carrier to have more control over the risk and to collect additional premium (for all lines), they can pass along some of the savings to the insured. It also helps the agent keep the account, as not all carriers can offer multi-line coverage, making the account more difficult to move. Many projects in NY not only require NYLL but they may also need higher limits, special endorsements, and admitted paper. Fortunately, PartnerOne is able to provide the Primary, Excess, Auto, and Workers Compensation for environmental contactor and consultant risks in NY. We can offer limits up to $15mil/$17mil on New York Free Trade Zone admitted paper and with an A+XV AM Best rated carrier.
Don’t wait until your client needs broader coverage for a contract. Call PartnerOne Environmental for your NY insurance needs and let us help you create valuable solutions for your insureds. Read more about NYLL/Action Over coverage in NY.