How much thought have you put into your commercial general liability insurance policy? Have you ever really read it? Have you ever sat down with your broker or your attorney and gone through it to see just what you really are covered for? If not, you may be shocked to find out what is NOT covered.
For example, your CGL policy may have a “cross-liability” exclusion. This exclusion commonly states that it does not provide coverage for an injured person when that person was an agent, employee or principal of an insured. The important thing to remember is that when you signed the contract you probably were required to name the owner, the general contractor (if you are a sub) and maybe even an engineer or an architect as additional insureds under your policy, thereby making them, their employees and agents “insureds” under your policy and triggering the “cross-liability” exclusion. Now if any of those people get hurt and sue you, the policy does not provide coverage. Makes you wonder why you purchased that policy in the first place doesn’t it? One of the most common problems that contractors run into when an injury occurs is that they failed to get written indemnification agreements from all of their subcontractors and/or they failed to get named as an additional insureds under their subcontractors policies. Under almost all policies issued in New York, this will result in a denial of coverage. Your CGL policy may also not cover “contractual indemnification”. What that means is that if your contract requires you to indemnify someone, and that person sues you for indemnification, you liability will not be covered by your insurance policy.
Of course there are only a few situations where you could end up with no coverage. They simply highlight the importance of understanding your insurance policy and making sure that you have the proper insurance to protect your business. For that reason, it is always a good idea to send your insurance policy to your attorney to have it reviewed to make sure that you understand what you are covered for. In some instances you can get certain exclusions removed before you start a job if you know that the exclusion could be a problem. In other situations it may just be best to get a different policy, one that actually protects your interests rather than taking your premium and giving you nothing in return!
Vincent T. Pallaci is a New York construction lawyer. He can be reached at firstname.lastname@example.org