In pretty much all states except New York, if someone doing construction work is injured on the job, workers’ compensation insurance will take effect and cover all medical expenses and lost wages.
Here, according to a spokesperson at the Society of Risk Management Consultants, an injured employee can sue a project owner or general contractor under the provisions of Labor Law 240, 241 and 241A, claiming that he or she was not provided a safe place to work.
The building owner and/or the general contractor often have a subcontract agreement with the injured worker’s employer, which provides contractual with a hold harmless and/or additional insured coverage to the owner and/or general contractor. The owner/general contractor’s insurer will then tender the claim back to the injured workers employer for coverage under their commercial general liability policy.
Changes to the System
Brian Schofield, senior managing director in the commercial insurance services group at risk and insurance advisor Crystal & Company, explains that traditionally, building owners will enter into a contract with a general contractor or a trade contractor to perform the work and will require the general contractor or trade to carry workers’ compensation, NY disability insurance, automobile liability, general liability and excess liability with specified limits relevant to the contract scope of services.
“The contract will also require the GC and/or trade contractor to hold the building owner harmless and indemnify them from lawsuits, be named as additional insurers on the auto, general and excess policies, make the contractor’s policies primary and non-contributory to the building owner’s policies and to make sure that these insurances will be kept in place for a period of three years (at least) after the work has been completed,” Schofield says. “This means that the injured worker is covered by the employer’s WC policy and any resulting liability claims and lawsuits the building owner will tender their defense and indemnification down to the GC and trade.”