What is Action Over?
According to the International Risk Management Institute (IRMI), Action Over is defined as a type of action in which an injured employee, after collecting workers compensation benefits from the employer, sues a third party for contributing to the employee’s injury.
Often the contractual liability section within the GL policy form leaves the employer exposed to suits against their GL policy via the Employers Liability (EL) exclusion. An example of this is when a subcontractor injured on a jobsite files a claim against his Workers Compensation carrier and then also files a claim against the General Contractor responsible for hiring the subcontractor. The subcontractor brings the “action over” back to the GC and the exception to the EL exclusion. This exclusion does not apply to liability assumed by the insured under an insured’s contract, which leaves the GC vulnerable.
If the GC and the subcontractor have a written hold harmless or indemnification agreement, the GC may be held liable in an action over lawsuit. This also may apply to a temporary employee hired by the employer.
Why is Action Over Coverage Important?
Insureds often don’t fully understand Action Over coverage or its value. They typically want the best/broadest coverage for the lowest premium, but it is crucial for the agent/broker to explain that the best coverage is not always the cheapest. Purchasing broad, necessary coverage comes at a higher cost. Ultimately, is it more cost effective to buy a slightly higher priced CGL/CPL policy with Action Over coverage in which the claim is covered, versus a policy for a lower premium with no Action Over coverage, resulting in paying the claim out of pocket.
As an agent, it’s your responsibility to understand potential gaps in coverage and to address them with your client. With Action Over claims, there are a lot of common misconceptions. It’s assumed that these claims happen mostly in NYC/5 boroughs and that they don’t occur “upstate.” This is not true. Action Over claims can happen anywhere, they may just be more prevalent in this region.
It’s also believed these claims are typically a result of a fall from height. This is true; many of these incidents are the result of a fall from scaffolding, ladders, tables, roofs, etc. However, UST installation and other excavation services may also lead to an Action Over claim since falling from ground level into a hole is considered a fall from height. Another misconception is that consultants (vs contractors) don’t have Action Over claims. Even consultants and engineers occasionally climb a ladder with their clipboard and are just as likely to fall as a contractor taking a sample.
For more information about Action Over coverage or to discuss a specific account, please contact us.
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