As reported by the IIABNY, the city Buildings Department earlier this year adopted a regulation changing the general liability insurance requirements that contractors seeking new or renewal permits must meet.
The rule took effect on June 13. It created new requirements for limits of insurance for different types of construction or demolition work done in the city. However, it also required policy terms and conditions that would be difficult or even impossible for many contractors to meet, including a prohibition of any contractual liability exclusions and a requirement for 30 days’ notice of cancellation to the department. Almost all GL policies contain contractual liability exclusions, though most provide an exception for certain agreements such as construction contracts. Also, many IIABNY members voiced concern that some insurance carriers are unwilling to provide advance notice of cancellation to third parties.
When the impending rule change came to light, the New York State Bar Association and the insurance industry worked together to educate Buildings Department officials about the problem. The NYSBA organized a meeting between the department and insurance industry representatives, including two IIABNY representatives, for Thursday in Manhattan. However, the NYSBA received a memo from the department earlier today stating that:
• The department will update its website to say that it will consider the phrase "contractual liability exclusion" to mean "an Insured Contract Exception no less favorable to the insured than ISO Form CG 00 01 (12/07 ed.)"
• The department will not enforce the advance notice of cancellation requirement beyond what New York Insurance Law already requires. New York Insurance Law Section 3426 permits admitted carriers to cancel GL policies midterm for a limited number of reasons with 15 days’ advance notice.
After receiving the memo, the NYSBA agreed with the department to cancel the scheduled meeting.