Here are five of the most common mistakes made by New York general contractors that might result in liabilities not covered by their policy.
1. Not having written contracts with clients and/or subcontractors
Written contracts with clients and subcontractors are important to protect you from unnecessary risk. It is also important that these contracts cover issues related to insurance coverage, what coverage you provide and what coverage should be in place for your subcontractor or client. Without these terms in a written contract, a general contractor can be assumed liable for damages that their liability insurance policy does not cover.
2. Not requiring adequate liability insurance coverage from subcontractors
Just as you need to have insurance limits high enough to cover potential liability issues, the same is true of your subcontractors. If a subcontractor is sued for damages in excess of their insurance coverage, the general contractor may be asked to pay the losses that go beyond the subcontractor’s limit. Your liability insurance generally will not cover losses in this scenario.
3. Not collecting current certificates of insurance from subcontractors
Just because your subcontractors have told you they have insurance or provided a certificate of insurance in the past, does not guarantee that their insurance is still in force. Make sure you are receiving updated insurance certificates direct from the subcontractor’s insurance agent. If their insurance has lapsed, you could become liable for claims related to their work on your projects.
4. Performing work outside a NYC general contractor’s normal scope of operations
When your insurance policy is written, it is based on a certain scope of services. For instance, electrical work is generally not performed by a general contractor. If you or your employees perform work for clients that is not included in the scope of services specified in your insurance policy (such as electrical installation) that work is not covered under your liability insurance.
5. Not understanding the exclusions in their liability insurance policy
Every insurance policy has a list of exclusions, items and situations which are specifically excluded from coverage. It is important to know what those exclusions are so that you avoid placing your company at risk.
At The Clausen Agency Inc., we make sure our general contractor clients are fully informed and help them avoid unnecessary liability risks. We’d be happy to review your insurance coverage and advise you on ways to further protect your company.
Personal Lines New Policy Underwriting Team
Personal Lines New Policy Underwriting Team
(631) 744-1732
