Worker’s Death at Co-op Underscores Importance of Air-Tight Insurance

On the morning of Nov. 28, a worker plunged to his death from the scaffolding outside a 22-story co-op on the Upper West Side. The tragedy serves as a grim reminder that co-op and condo boards must have iron-clad insurance provisions in their agreements with all contractors and subcontractors before any work commences. There is no margin for error.

First line of defense. First and foremost, the agreement with the contractor must specify that the condo or co-op and its board members, managing agent, officers, agents and employees are deemed additional insureds under the contractor’s liability policies. Reliance solely on a certificate of insurance from a vendor or contractor can leave a building exposed to claims for property damage, personal injuries or death. Why? Because the certificate of insurance provides the different types of insurance the contractor is carrying, the limits of insurance the contractor maintains and the name of the insurance company providing the insurance — yet the certificate itself provides no additional insurance coverage.

Security blanket. Most often, a contractor’s general liability policy includes what is known as a “blanket additional insured endorsement.” What makes an endorsement “blanket” is that it doesn’t specifically name one building or another as an additional insured; rather, it states that it will cover those buildings that the contractor agrees to name as additional insureds in a written agreement. In many instances, a certificate of insurance will state that a person or entity is an additional insured “to the extent required by written contract.” Accordingly, it is the language of the written agreement between the building and contractor — not the certificate of insurance — that triggers additional insured coverage for the building under the “blanket” endorsement.

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Additional protection. For additional protection, the board should require that all subcontractors sign insurance and indemnification agreements directly with the building before they are allowed to perform any work. This will ensure that the building also has the benefit of coverage under the subcontractors’ insurance, which would be critical in the event of a disclaimer by the general contractor’s insurer.

Beware exclusions. No work should be allowed to commence until the building’s insurance broker has reviewed the primary and excess (umbrella) policies maintained by the contractor and subcontractor to ensure that there are no critical exclusions. To save money on premiums, for example, a contractor’s insurance policies may have endorsements that exclude coverage for gravity-related Labor Law claims — such as the worker who fell to his death at the Upper West Side co-op.

Failure to make sure the building is fully insured by its general contractor and its subcontractors can lead to adverse consequences for the building, including a significant increase in insurance premiums, a non-renewal of the policy or liability for uncovered claims.

Scott S. Greenspun is a principal at the law firm Braverman Greenspun. Jillian Menna is general counsel for Genatt V Insurance Solutions.