SDV Insights

Insurers Overreach With Non-Union Labor Exclusion

Policyholders need to be aware that insurance companies are attempting to restrict CGL coverage through exclusions for liability caused by non-union labor. While these “Non-Union Labor Exclusions” vary in form, coverage is generally excluded for liability (including bodily injury and property damage) resulting from or caused by “temporary” or “casual” workers.

“Casual” workers are defined as any “non-union” labor employed by an insured for a short time and limited purpose. Similarly, a “temporary” worker is any person furnished to an insured, “by anyone other than a labor union,” to substitute for a permanent worker on leave or to meet seasonal or short-term workload conditions.

Given the exception in each definition for workers furnished to an insured by a labor union, it seems clear that these exclusions are intended to avoid coverage for liability arising out of non-union labor, and as a corollary, reduce or eliminate their use on construction projects.

The attempted use of Non-Union Labor Exclusions is particularly troubling for policyholders and upstream parties relying on traditional means of risk transfer, given the recent shortage of union labor as a result of the current construction boom seen in many major markets.

Owners and general contractors that use or are considering the use of non-union workers must be aware of these exclusions, and should reject policies that include them in order to avoid potential uninsured exposures.


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