Toughened insurance requirements taking effect in New York City later this month may prove impossible for contractors to meet. The New York City Department of Buildings has adopted a regulation changing the general liability insurance requirements that contractors seeking new or renewal permits must meet. The rule takes effect on June 13.
The regulation creates new requirements for limits of insurance for different types of construction or demolition work done in the city. The required limits vary by type of work and building height and occupancy. However, provisions relating to the terms and conditions included in general liability policies are troublesome; insurance agents and brokers may find them very difficult or impossible to meet. For example, the regulation prohibits policies from including provisions that exclude coverage for:
* Completed operations
* Explosion, collapse and underground hazards
* Contractual liability
* Third-party over actions
* Residential construction
* Exterior insulation and finish systems (EFIS)
Almost all GL policies contain contractual liability exclusions; they provide coverage for certain contracts by making exceptions to the exclusions.
Consequently, producers may find it impossible to comply with this requirement. Also, the regulation requires all policies to carry endorsements giving the department 30 days' notice if the insurance carrier cancels, terminates, modifies or changes the policy in a way that affects the city (10 days' notice if the carrier is cancelling for non-payment of premium.) IIABNY members have reported that some carriers are unwilling to issue these endorsements.
IIABNY has asked the New York Insurance Department to address these issues with the City's Building Department. We have not ruled out contacting the Building Department directly to inform it of the difficulties contractors will have meeting these requirements.