SDV Insights

Labor Guard is a project-specific insurance policy for project owners and general contractors operating in New York. The fundamental principle of the program is good risk transfer. SDV is retained to review subcontractor insurance policies and ensure that they meet specific minimum requirements, which are critical to transferring claims off the owner or general contractor’s insurance program and on to the responsible subcontractor’s insurance.

Labor Guard began in 2015 with a handful of projects and two SDV attorneys performing reviews for clients. Today, SDV has handled more than 70 projects and is staffed by a robust team of over 20 attorneys trained to spot the critical issues which frustrate risk transfer. SDV attorneys have spent thousands of hours reviewing subcontractor policies in New York – at least 1,000 unique subcontractors have been through the vetting process since the program’s inception. SDV takes pride in that its expertise and persistence have led to an overall improvement in the number of subcontractors working in New York with insurance that meets basic contractual requirements.

SDV reviews prime subcontractors who perform actual construction labor on the project site. Professional services consultants (such as architects, engineers, surveyors, etc.) are exempt from review. In addition, any sub-subcontractor likewise does not have to be reviewed. The premise is that the prime subcontractor is responsible for the entire scope of work it has contracted for and is, therefore, likewise responsible for providing indemnity and insurance for that scope, regardless of whether it subcontracts a portion of it to another company.

SDV reviews the policies for critical issues that have historically interfered with proper risk transfer in New York. For example, these issues include:

• Labor law or “action over” exclusions which bar coverage for employee bodily injury claims.
• Privity wording in additional insured endorsements, which would bar coverage for anyone not in a direct contract with the subcontractor.
• Scope exclusions that would bar coverage for the same work the subcontractor is performing.
• Primary and non-contributory coverage on excess policies (i.e., anti-horizontal exhaustion wording).
• Appropriate New York workers’ compensation coverage, particularly for out-of-state subcontractors who may not be aware of the state’s stringent requirements.

Owners or general contractors interested in Labor Guard should discuss the program with their retail broker. SDV does not participate in the sale of Labor Guard to prospective insureds but rather acts as a vendor to the insured once Labor Guard has been procured.

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