Why is it important for Contractors to have Risk Transfer Agreements with Sub-Contractors?

A New York HVAC contractor subcontracted out some duct work to a sheet metal contractor. The HVAC Contractor had insurance but also had the proper risk transfer or hold harmless agreements in place. At the job site, the employee of sheet metal contractor was trying to use a 6 foot ladder but the manager advised it was too small and he will get an 8 foot ladder. He clearly specified NOT to use it and wait for the 8 foot ladder. The employee decided he couldn’t wait and used the 6 foot ladder. While standing with one foot on the top rung and the other on a beam, he slipped and injured his back pretty bad. Who is at fault? In New York, it’s the HVAC (General Contractor) believe it or not.

The lawsuits came in to the HVAC contractor even though he said to wait. New York labor law still holds the General Contractor responsible regardless of negligence. With the proper risk transfer in place, the sub-contractors General Liability Carrier defended the HVAC contractor but unfortunately they did not have enough coverage. The claim is expected to settle over the 3 million limits of the subcontractor and the HVAC contractors insurance will now come into play.

If you have questions or concerns about New York Labor Law or Action Over Coverage, please give us a call.