A common exclusion pertains to residential construction, says Deanna Napier, senior vice president at Van Gilder in Denver. “A lot of commercial contractors are surprised to learn a residential exclusion can include military barracks, senior care centers and mixed-use properties. They start a project and then learn that they don’t have coverage,” she says.

Sharkey adds that contractors working in the East should be aware of the rise in third-party “action-over” claims that have created additional financial risk for contractors and the companies that insure them. For example, an employee of a subcontractor injured at a jobsite can file a suit against the general contractor alleging that the jobsite was not safe. In this case, the GC would be the third-party being sued because the subcontractor’s employee cannot sue his employer directly for a work-related injury if he is collecting workers’ compensation. A general liability policy with an action-over exclusion would not cover the claim, leaving the GC exposed.

“Design-build contractors face unique exposures, as CGL policies generally exclude errors-and-omissions liability, which often ties into design issues,” Napier says. “A contractor might build a brand-new building and fail to comply with ADA standards because there are not enough wheelchair ramps. While there’s nothing wrong with the building, the contractor may be on the hook for the economic loss that results from the building owner having to delay the building’s opening. That’s where a professional liability policy might be necessary,” she adds.

“The best advice I can give to any contractor is to find a good broker and a good attorney and be honest about the work that you do and the risks that you take,” Napier says. “A good broker will help you find the appropriate level of coverage and a good attorney will make sure nothing gets lost in the fine print.”

Key Exclusions to Monitor

• Amendment to the terms governing known injury or damage (e.g., first manifestation) and/or continuing and progress damages, which may affect how losses are allocated and thus restrict coverage limits that would otherwise be available.

• Amendment to the definition of “insured” contract, which may affect the extent of contractual liability coverage afforded under the CGL policy.

• Removal of the exception to “your work” exclusion, which narrows the scope of coverage afforded by eliminating an important standard exception where the damaged work, or the work out of which damages arises, was performed by a subcontractor.

• Wrap-up exclusions, which may be overly broad so as not to align with exposures that are not afforded coverage under a wrap-up program.

• Residential work exclusions, particularly how “residential” is defined (hotel, apartments, mixed-use, etc.)

• Manuscript additional insured endorsements that may not comply with contract requirements.