Here is some front lines information on insurance that everyone working in New York or contemplating working in New York needs to be aware of.
First, you need to tell your insurance agent if you are headed off to New York to work. Your insurance agent will need to figure a lot of things out on your insurance. Here’s a look at some of the big insurance hurdles that we have run into in the past week.
New York has an extremely hostile insurance climate for GL (General Liability) coverage. In New York, there is a 1920’s-vintage injury to workers law that enables injured workers who fall from heights (could be a step ladder) to recover under the GL policies of contractors. This situation has nothing to do with the hurricane.
As a result of this law, for the past three years it has been difficult to find insurance on New York home-based contractors. Many firms are uninsured today through no fault of their own solely because of the GL insurance market collapse for New York-based contractors.
As of yesterday, our two remaining go-to insurance companies that would insure restoration contractors based in New York would not take on any new business.
Do not hire uninsured firms as subs. If they did not have good insurance in place before the storm, chances are they will not be able to buy it at any price for months. Your insurance could be the only insurance on the job.
Firms based outside of New York and mobilizing to go work in New York should automatically have liability insurance in place for New York operations. There are insurance companies that continue to insure restoration firms temporally working in New York and they will write new business.
Check your insurance policies to make sure you do not have restrictions on them for operations in certain states. Some liability insurance policies have New York operations exclusions. There are ways to fix these New York operations coverage restrictions for firms that are not based in New York, sometimes by changing insurance companies as a last resort.
Remember flood water is Category 3 water. The same exclusion that blows out coverage for mold losses blows out the insurance for being on a Category 3 water loss. The GL policy excludes all losses on a Category 3 water loss, including burning down the building, so you have no liability insurance on the job site itself. It also excludes losses caused by the contaminated water. If you have a customized combined GL/CPL policy designed specifically for a restoration firm, you should be OK. But make sure the CPL policy specifically insures bacteria or microbial matter as a defined pollutant. If you are not on a combined GL/CPL/Professional liability insurance policy form with enhanced coverage for fungus/mold/bacteria, you would be well advised not to work on the Sandy loss at all. The reality is your insurance coverage is like Swiss cheese - it is full of holes and is not reliable for Sandy work.
You will need to add other states to your worker’s compensation policy when working outside of your home state. Most restorers know this, but to get paid by an insurance policy for your services on any loss beyond wind driven rain, there will need to be a flood insurance policy on the property. Losses caused in any way by a flood, including tidal surge, are excluded on standard property insurance policies. Do not assume if someone has a fire policy that they have insurance to pay for your work.
I applaud the work of the responders. I have friends in the Sandy path that you are helping. If we can help you with insurance advice, please let us know.
Good luck and be safe out there.