Understanding Action Over Claims and How Subcontractor GL Endorsements Respond

How an action over claim unfolds

Workers compensation is the exclusive remedy for an injured employee against his own employer. It is not a bar against anyone else. So when a worker employed by a subcontractor is hurt on your project, the lawsuit names the owner and the general contractor, the parties the worker is allowed to sue.

The general contractor then files a third-party claim against the employer: contractual indemnity under the subcontract, common law indemnity and contribution. That second suit is the action over. Liability travels back over the workers compensation bar to the subcontractor that employed the injured worker, and the question becomes which of the subcontractor's policies pays for it.

Consider a drywall finisher employed by Northgate Interiors LLC who falls from a baker scaffold on a Queens office fit-out. He collects workers compensation from Northgate's carrier, then sues the building owner and the general contractor under the New York Labor Law. The general contractor tenders to Northgate's general liability carrier as an additional insured and brings Northgate into the case for indemnity. Each of those moves runs into a different policy provision.

Why New York produces so many of these claims

Labor Law Section 240(1), the scaffold law, imposes liability on owners and contractors for gravity-related injuries when proper safety devices are not provided. The worker's own comparative negligence is not a defense. The defendant has to show the worker's conduct was the sole proximate cause of the accident, which rarely succeeds. Section 241(6) imposes a nondelegable duty to comply with specific Industrial Code provisions, and there the worker's comparative fault can reduce recovery. Section 200 codifies the common law duty to provide a safe workplace and generally requires supervision, control or notice.

The employer's side is governed by Workers Compensation Law Section 11. Since the 1996 amendments, a third party can pursue the employer for contribution or common law indemnity only if the worker suffered a grave injury. That is a short statutory list, including death, permanent and total loss of use or amputation of an arm, leg, hand or foot, paraplegia or quadriplegia, total and permanent blindness or deafness, and certain permanent brain injuries. The other route is a written contract, entered into before the accident, in which the employer expressly agreed to indemnify or contribute.

In practice, the written indemnity clause in your subcontract is often the only path back to the employer, and the subcontractor's general liability policy is what funds it.

Which policy is supposed to respond

Three separate coverage grants are in play, and each has its own trigger. The protection you think you have depends on all three lining up:

• Additional insured coverage on the subcontractor's CGL. The standard employer's liability exclusion in CG 00 01 applies to bodily injury to an employee of "the insured". Under the separation of insureds condition, the injured worker is not the general contractor's employee, so the exclusion should not bar the general contractor's own additional insured claim.
• Contractual liability coverage on the same CGL. Both the contractual liability exclusion and the employer's liability exclusion carve back liability assumed under an "insured contract". A subcontract indemnity clause is the classic insured contract, so the policy funds the subcontractor's promise to indemnify you.
• Employers liability, Part Two of the subcontractor's workers compensation policy. It covers third-party-over claims for common law indemnity and contribution, but it excludes liability assumed under a contract. That exclusion is why the CGL's insured contract coverage matters so much.