Third Party Over Liability

I recently had a conversation with a client who wanted to do work in a State other than his home State.  This usually isn’t a problem, unless the State is excluded under their policies, or they have some kind of coverage limitation endorsement.  In this case, they had the Action Over – Designated States endorsement on the policy.

The State he wanted to work in was specifically scheduled in the endorsement.  Thus any claim where there was a third party over claim, would be excluded.  So, what is third party over? 

The easiest way to explain it is by an example.  Let’s say you are an electrical contractor doing work for a GC.  One of your employees is hurt while working, and files a WC claim under your policy.  He then files a claim against the GC for contributing to the injury.  The GC will submit the claim back to your liability carrier (because of a subcontractor agreement you signed with the GC).  So, the claim becomes both a WC and liability claim to your company.

If you have the Action Over – Designated States endorsement on your policy and the injury happens in the State specified in the schedule – there will be no liability coverage.  Be very careful.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource

General Liability Classification Limitation Endorsement

I was reading this month’s Rough Notes magazine and happened upon an article about the classification limitation endorsement on the commercial general liability policy (CGL).  I thought it would make sense to talk a little bit about it.

The endorsement reads: “Coverage under this policy is specifically limited to those classification codes listed in the policy.  No coverage is provided for any classification code or operation performed by the named insured not specifically listed in the Declarations of the policy.”

We see this endorsement on many surplus lines policies; it really acts more like an exclusion.  If you have this endorsement on your policy, be aware of what classification(s) is listed.  If for some reason you are doing something different than what was stated in the application and on your declaration page, the insurer will deny coverage and defense.

Let’s say you are a HVAC contractor and putting in an A/C unit.  As the HVAC contractor, your job is not to do the electrical connection, but you do it anyway.  If there is a loss, and you have this endorsement on your policy, the insurer will more than likely deny coverage.  Bottom line – check your policy to see if you have the endorsement.  If you do, try and get it removed, and if you can’t, make sure your classification(s) is as broad as possible.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource

Four Point Workplace Safety Program – OHSA’s Guide to Helping Employers

Typically, a workplace safety program isn’t mandatory.  However, as most contractors know, many GC’s require formal plans in place prior to commencing work.  OSHA has issued guidelines on what employers should have in place to protect employees from occupational hazards.

If your plan is weak, or nonexistent, consider implementing OSHA’s outline for an effective safety program.  The OSHA Four Point Workplace Program consists of:

  1. Management Leadership & Employee Involvement – There must be commitment from the top, as well as continued support from management.  Thought should be given to an annual review, goal setting and action planning.  This shouldn’t be a top down, but rather a collaborative effort amongst all employee classes.
  2. Worksite Analysis – A baseline analysis needs to be done to identify areas of greatest concern.  If you can’t do this yourself, it may be advisable to bring in an expert.
  3. Hazard Prevention & Control – Properly identifying the most hazardous areas are of utmost importance.  Additionally, developing ways to control those hazards is equally important.  It may be necessary to develop plans based on any OSHA standards that may apply (noise reduction, lock out tagout, etc.)
  4. Training – What good is a plan if it’s not communicated, administered, monitored and adjusted?  This isn’t something that should be done once a yr, but continually.  This is an essential step if you truly want to change the culture in your organization.

Contractors are always talking about how serious they are when it comes to safety, but it’s amazing to me how some of those same contractors don’t “walk the walk.”  So, if you are serious about safety, consider OSHA’s guideline.

This information brought to you by Chris Sheppard of Smith Buckley & Hunt Insurance Agency, your Massachusetts contractors insurance agent and Massachusetts business insurance resource

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