ACTION OVER COVERAGE

What is action-over coverage?

Confirm the definition and how it specifically protects your business from lawsuits where an injured employee sues a third party, and that third party then sues you based on a contractual agreement.

Does my standard CGL policy already cover this? 

Ask if your existing or prospective commercial general liability (CGL) policy contains an exclusion for action-over claims. Many standard policies do.

What is the "employers liability" exclusion? 

Understand how the standard employers liability exclusion in a CGL policy is what creates the gap that action-over coverage is designed to fill.

Are there different types of action-over claims? 

Ask about the common scenarios that trigger action-over suits, particularly those involving height work, such as falls from ladders or scaffolding.

Is this type of coverage required in my state? 

Determine if your state, such as New York, has specific labor laws that make action-over exposure a significant risk for contractors and other businesses. 

What is the coverage limit? 

Verify the maximum amount the policy will pay out for a single claim or over the policy period.

How much does this coverage cost? 

Inquire about the premium, understanding that adequate coverage for action-over claims often comes at a higher cost than a policy with a broad exclusion.

Are there any specific exclusions? 

Read the policy carefully to find any additional exclusions or limitations that could still leave your business vulnerable.

Are defense costs included? 

Confirm whether the policy pays for your legal defense costs, which can be substantial even if the allegations are unfounded.

What is the deductible? 

Know the amount you will have to pay out-of-pocket before the insurance coverage begins. 

How do my indemnification agreements affect this? 

Discuss how hold-harmless and indemnification clauses in your contracts with general contractors or property owners relate to the coverage.

Do I have additional insured status? 

If you are a subcontractor, ask if your policy protects the general contractor or property owner by naming them as an additional insured.

How does this policy handle prior acts? 

Inquire about coverage for claims arising from work completed before the policy was in effect.

What are my responsibilities for risk management?

Ask if there are requirements for documented safety protocols or a clean claims history to qualify for or maintain coverage.

How does a "hammer clause" work? 

If you have an excess and surplus policy, understand if it contains a hammer clause, which pressures the insured to accept a settlement. 

POLICY & CLAIMS PROCESS:

How does the claims process work? 

Ask about the insurer's process for handling action-over claims and who to contact in case of an incident.

What is the insurer's reputation for handling these specific claims? 

Consider the insurer's experience and expertise in handling complex action-over cases.

Can I work with an independent or a captive agent? 

Know if you are limited to a single insurance company (captive) or if your agent can shop quotes from multiple providers (independent).

How will this policy be renewed? 

Understand how the renewal process works and what factors might cause your premiums to increase.

Is the total premium cost-effective? 

Compare the cost of robust action-over coverage against the potentially catastrophic expense of an uninsured lawsuit.