What is Action Over Exclusion?

As its name implies, an Action Over exclusion excludes a contractor’s coverage for employee injuries that involve 3rd party lawsuits. Let’s take an apartment renovation project performed by a contractor with action over exclusion as an example:

  1. An condo or co-op owner hires a contractor to renovate the kitchen.
  2. Before the start of the renovation, the building management and the contractor sign a Hold Harmless Agreement. The contractor agrees to indemnify the building and transfer liabilities back to his policy.
  3. An employee of the contractor is injured at the job site.
  4. The employee collects worker’s compensation from the contractor.
  5. And, the employee files a lawsuit against the building for failure to maintain a safe working site.
  6. The building management shifts its liability to the contractor because of the signed agreement.
  7. However, the insurance company cannot tender the claim because of the exclusion on the contractor’s policy.

Obviously there is a problem now.

The Action Over Policy problem for NY Contractors and Apartment Buildings

Third party action over claims are increasing and the payouts are huge. Therefore, many insurance companies try to get ahead of this situation. They put an exclusion into the contractor’s policy specifically for this scenario. Because of this action over exclusion, the building or another 3rd party would not be covered in the event of a lawsuit.

Over the last 2 years, New York City building managements start to mandate action over coverage. In order for contractors to work in these buildings, they have to spend 20x more to get rid of the action over exclusion in their policies.

As a result, many contractors are left without action over coverage because they cannot afford this ridiculously expensive policy. And they will have a difficult time getting approvals from condo or co-op buildings.

When everything is taken into consideration…

This action over situation is really frustrating for many contractors in New York. If a contractor does not get action over coverage, he is limited to the types of job he can apply for and qualify for. And if a job site injury occurs, he runs the risk of a very costly lawsuit.

To get away from this complicated situation, Remodel Magic added this elite action over coverage in our insurance policy. It offers true peace of mind protection to our client’s assets. And it will guarantee 100% approval from condo and co-op buildings in New York. Give us a call if you are looking forward to a stress-free renovation in your apartment.