New York City Fixes Contractor Insurance Rule

Insurance agents welcomed a decision that will make it easier for contractors to meet New York City’s insurance requirements.

The New York City Department of Buildings has promised to modify its general liability insurance requirements for contractors. The department also agreed not to enforce the advance notice of cancellation requirement beyond the standards in New York Insurance Law, the Independent Insurance Agents and Brokers of New York said.

The agents’ group worked with the New York State Bar Association and other insurance interests to change a new building department rule, which became effective June 13, requiring contractors seeking permits to meet enhanced standards for general liability insurance. Among other things, this rule prohibited insurance that does not cover a contractor’s legal liability for injuries or property damage resulting from the contractor’s agreement to pay for liability claims against another party. It also required all policies to guarantee that the insurers would send written notices to the department should they cancel or change the policies.

Agents told city officials that almost all commercial general liability insurance policies contain language that removes coverage for liability assumed under some contracts. Also, insurers differ on their willingness to provide advance notice of cancellation to entities other than the policyholder.

According to a city memo, the department will accept policies that exclude liability assumed under contracts if the policies make exceptions for certain types of contracts.

The regulation still requires contractors’ liability insurance to cover injuries or damage arising from things such as completed work, residential construction, third parties’ liability for injuries to the contractors’ employees, and a specified building exterior finishing system.

Agents said that some insurance companies might be reluctant to provide some of these coverages, but they said the department’s action had solved much of the problem.

Topics New York Agencies Contractors