Action-over claims can result in significant and unexpected liability for business owners, and these claims may not be covered by all commercial general liability CGL policies. For insurance professionals and their insureds, not only can an uncovered loss damage relationships, but it also can lead to litigation. Action-over claims often originate from events of significant physical harm, where the plaintiff seeks to recover additional damages from the deepest pockets, even if that includes recovery from the employer through circuitous means. The concern is even greater in certain regions of the country where the risk may be concentrated or the courts may be particularly plaintiff friendly. The liability issue in action-over claims arises from indemnification agreements, which are common in business contracts in construction and many other industries. These laws, however, generally do not bar a worker from suing a third party. This boomerang effect of third-party action-over claims is worrisome for employers because insurers may exclude coverage for such claims in CGL policies. Insurance professionals need to understand this complex scenario and how the insurance markets are reacting to it, to make sure that their insureds have protection. Businesses in many types of industries use subcontractors to perform work on their premises.
What is Action Over?
Avoiding the Two Hit Combo From Action Over Claims
About Us. Contact Us. Construction is an inherently dangerous industry. Employee injuries are frequent and can be severe. Learn More About. Construction contracts typically seek to make the contractor employer - those most responsible for primary employee safety at the job site - the party responsible for all injuries suffered by employees. In efforts to better manage third party over actions in the construction industry, it is important for all parties to be aware of factors that impact these claims, specifically:. Whether you are the owner, general contractor or subcontractor, the key to providing coverage for these types of claims is to customize your company's insurance plan to specifically fit your needs and provide protection against potential claims. It is necessary to have insurance policies in place that anticipate claims that could arise.
Why is Action Over Coverage Important?
Often the contractual liability section within the GL policy form leaves the employer exposed to suits against their GL policy via the Employers Liability EL exclusion. An example of this is when a subcontractor injured on a jobsite files a claim against his Workers Compensation carrier and then also files a claim against the General Contractor responsible for hiring the subcontractor. If the GC and the subcontractor have a written hold harmless or indemnification agreement, the GC may be held liable in an action over lawsuit. This also may apply to a temporary employee hired by the employer. Purchasing broad, necessary coverage comes at a higher cost.
Contractors Insurance Resources. In a nutshell, lawyers have figured out a way to file a claim on your general liability policy for something that should be covered through your Employers Liability Insurance. The results of these claims for contractors are higher rates on their liability insurance and potential gaps in their coverage. The purpose of this article is to explain how these claims work and educate contractors on what they can do to protect themselves.