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What is Action Over Coverage?
Action Over Coverage is a specialized provision that protects your business from a specific legal "loophole" in New York. It applies when an injured employee collects workers' compensation and then sues a third party (like a property owner), who then sues you based on an indemnification agreement. This coverage ensures your insurer defends you against these multi-million dollar third-party claims.
Does my standard CGL policy already cover this?
Not necessarily. Many standard General Liability Insurance policies contain a hidden Action Over Insurance Exemption that specifically denies coverage for claims involving your own employees.
What is the "Employers Liability" exclusion?
This common exclusion in a standard CGL policy removes coverage for bodily injury to your employees. While workers' compensation covers the injury, this exclusion creates a dangerous gap when that injury turns into a third-party lawsuit against you.
Are there different types of Action Over claims?
The most common triggers in New York involve height work and the "Scaffold Law" (Labor Law 240/241). These include falls from ladders or scaffolding and injuries from falling objects, where owners and contractors are held to a standard of absolute liability.
Is this type of coverage required in New York?
While not legally mandated like workers' compensation, it is practically required to do business in the 5 Boroughs. Most Manhattan and Bronx building owners will not let a contractor on-site without proof of Action Over coverage.
What is the coverage limit?
This varies by policy, but standard limits often start at $1,000,000 per occurrence. For high-rise projects in New York County, you may need an umbrella policy to reach the higher limits required by developers.
How much does this coverage cost?
Premiums are higher for Action Over coverage because the risk in New York is significantly greater than in other states. However, the cost is far lower than the "six to seven-figure" settlements common in Labor Law cases.
Are defense costs included?
Yes, a robust policy will cover your legal defense, which is vital since New York construction litigation can be extremely prolonged and expensive.
How do my indemnification agreements affect this?
Contracts with general contractors or property owners often include "hold-harmless" clauses that shift all liability for worker injuries onto you. Action Over coverage is the primary mechanism that funds these contractual obligations.
What is a "Hammer Clause"?
Found often in Excess and Surplus (E&S) policies, a "Hammer Clause" allows an insurer to pressure you into a settlement. If you refuse to settle, the insurer may cap their liability at the settlement amount, leaving you to pay any further costs.
How does the claims process work?
If an incident occurs, you must notify us immediately. The process typically begins when you receive a "tender" letter from a third party demanding that you defend and indemnify them for a worker's injury.
Do I have "Additional Insured" status?
If you are a subcontractor, your policy likely names the GC or property owner as an Additional Insured. This ensures your insurance is the first to respond to a claim, protecting the owner's policy.
Can I work with an independent agent?
Yes. Action Over Coverage is an independent specialist, meaning we can shop your risk across multiple providers to find a policy without broad exclusions.
Navigating these technical details is critical to your business's survival. If you have questions about specific policy endorsements or need a professional audit of your current coverage, our Katonah, NY team is here to help.