Bryan Paul brings over a decade of frontline experience offering a rare perspective shaped by insurance and client-side risk management. His deep understanding of prolonged market pressures enables him to design practical, resilience-driven risk strategies. By bridging insurer insights with real-world construction challenges, he helps organizations manage volatility effectively, contributing to a stable and risk-aware construction ecosystem.
In 2012, numerous insurance markets were actively providing capacity in New York City (NYC), with carriers willingly offering hundreds of millions of dollars in per-project limits as sole carriers, all on admitted paper with the New York State Department of Financial Services. That landscape has changed dramatically. Today, only a handful of admitted markets remain for primary policies, and they are highly selective. Excess and surplus markets cycle in and out of appetite with regularity. The liability tower is now constructed from many layers in small limit increments. On the first $15 million of coverage, it is difficult to find any single carrier willing to write more than $5 million. Pricing trends reflect the severity of market conditions. In 2010 the total cost of risk was around 3–5 percent and have climbed to 13–15 percent today, depending on project size. These costs affect the full spectrum of participants, owners, developers, general contractors, subcontractors, suppliers and consultants, all who help develop and renovate real estate in NYC. The minimum premiums for general liability coverage in NYC now range from $30,000 to $50,000 per year for just $1 million in coverage, and they continue to rise. This creates a formidable barrier to entry for new and small businesses, which struggle to compete when baseline insurance costs are this high. Coverage Erosion: Exclusions and Restrictions Beyond pricing, the scope of available coverage has deteriorated significantly. Exclusions and restrictions have proliferated across the market in ways that would have been unimaginable a decade ago. Having tracked subcontractor insurance policies for the past ten years, the question I find myself asking each day is: “What new exclusion or limitation will I encounter today?” The following is an overview of the most significant and problematic coverage issues currently present in the market: Action Over Exclusion Variations This exclusion is the single most critical coverage issue for contributors in NYC. In short, if an action over exclusion is present, there is no coverage for worker injuries. These exclusions appear under numerous titles designed to obscure their effect, including: employer’s liability, injury to employees, workers’ compensation, independent contractor, casual worker, injury to contractors working on your behalf and labor law 240 exclusions, among others. Notably, the casual worker exclusion would eliminate coverage for any new hire who is injured and subsequently leaves employment, even if the injury occurred during active employment. Amendment to the Definition of Insured Contract Certain policies limit the definition of “insured contract” exclusively to lease agreements. This is unacceptable, as it eliminates contractual liability coverage for all service agreements. Any contributor relying on indemnification provisions in subcontracts, vendor agreements or construction contracts would find those protections rendered meaningless under such a policy. Hard Hammer Clauses This policy condition imposes strict requirements on anyone hired by the subcontractor, including executed indemnity agreements and specified insurance requirements. A hard hammer clause results in no coverage if these conditions are not satisfied. By contrast, a soft hammer clause typically increases the deductible or adds additional premium for non-compliance. Hard hammer clauses are particularly punitive given the operational realities of construction projects. Height Exclusions These exclusions appear in several forms and can significantly limit coverage for routine construction activities: • Exterior height exclusions, which may apply above a defined threshold, such as 30 feet, three floors or 30 units, or may exclude all exterior heights entirely. “Contributors must remain vigilant in reviewing policy language and resist the temptation to accept coverage at face value. They should work with experienced advisors to identify and address the exclusions and limitations that have become standard features of today’s NYC construction liability market.” • Interior height exclusions above 9 feet. This is broadly unacceptable across project types as workers can readily suffer fall injuries in elevator shafts, stairwells or open floor penetrations well within that threshold. Residential Exclusions These exclusions are designed to eliminate carrier exposure to class action construction defect claims arising from for-sale residential real estate, including condominiums, HOAs, townhouses and co-ops. Approximately 90 percent of such exclusions are limited to for-sale properties. The remaining 10 percent however, extend to rental apartment construction, an outcome that significantly limits coverage for a broad class of NYC development activity. Exclusions for Designated Work, Territory or Classification Code These are free-form exclusions that permit carriers to exclude any scope of work or geographic area at their discretion. Examples encountered in practice include exclusions for all five boroughs of NYC, the entire State of New York, fire sprinkler exclusions applied to the plumber installing the fire sprinkler and coverage restricted solely to the classification codes listed on the policy declarations page. Sunset Clauses These provisions limit the reporting of claims to five years from the date of occurrence. Given that the statute of limitations in NYC is six years for certain claim types, this effectively eliminates coverage for defects discovered in the sixth year, precisely when coverage is most likely to be needed on long-tail construction defect matters. Policies riddled with the exclusions described above have become distressingly common, what might aptly be called “Swiss cheese” policies, where the holes outnumber the protections. The question the industry continues to ask is: when will this market cycle turn? In my view, meaningful relief will not come until there is genuine tort reform in New York. Contributors must remain vigilant in reviewing policy language and resist the temptation to accept coverage at face value. They should work with experienced advisors to identify and address the exclusions and limitations that have become standard features of today’s NYC construction liability market.