Do Contractors and Landlords need Action Over Coverage?
Posted by LPL Risk Management on
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. Then, because of some type of contractual relationship (Risk Transfer Agreement) between the third party and the employer, the liability is passed back to the employer by prior agreement.
It is particularly important that New York Property Owners and Contractors have this covered in their General Liability Insurance. The New York Scaffold law (NYS Labor Law 240/241 imposes “absolute liability” for elevation-related injuries on contractors and property owners engaged in construction, repair, or demolition work. Absolute liability means that the contributing fault of an injured worker, such as failure to use provided safety equipment or gross negligence, is virtually irrelevant in court.
While the law serves a great purpose for NYC high rise construction, it has been abused in the courts. Because a settlement is virtually guaranteed, this law generates an astounding number of expensive lawsuits. In fact, more than half of the most expensive New York settlements in 2012 were a result of the Scaffold Law, and the number of lawsuits has increased by 500% since 1990, despite a decreasing rate of injuries. Because of this, the cost of insuring construction projects is as much as 10 times higher than other states.
The tremendous costs of the Scaffold Law have an impact across New York: construction costs go up, fewer workers are hired (with some being laid off), consumers pay higher prices for goods and services, and the economy suffers.
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