For insurance retailers working with construction and high-risk accounts, Action Over coverage and the exclusions that often accompany it remain among the most critical, yet commonly misunderstood, aspects of a general liability (GL) policy. These clauses can quietly strip coverage from clients who are otherwise diligent about contractual risk transfer, leaving general contractors, property owners, and employers exposed at the worst possible moment: after a workplace injury and ensuing lawsuit.
At Novatae, we see this issue arise frequently, especially in states like New York where labor laws and litigation trends make Action Over claims both more common and more costly. This guide will help you understand the nuances of Action Over exposure, recognize exclusionary language in GL forms, and work with wholesale partners like Novatae to ensure your clients get the coverage they actually need, not just the illusion of it.
Action Over refers to a legal action brought by an injured employee against a third party (often a general contractor or property owner) after collecting workers’ compensation benefits from their direct employer. The third party, having signed a hold harmless or indemnity agreement with the injured worker’s employer (usually a subcontractor), then seeks defense and indemnity under that subcontractor’s GL policy.
This creates a situation where liability is effectively “passed back” to the employer through contractual means. But here’s the catch: many GL policies include Action Over or Third-Party Over exclusions that bar exactly this type of liability, even when there’s a valid indemnity clause in the contract. That means the subcontractor’s carrier may deny coverage, forcing them to indemnify the GC out-of-pocket or leaving the GC itself without recourse.
These exclusions are often buried in endorsement schedules and difficult to spot unless you know what you’re looking for. Most notably, they amend or remove the exception to the Employer’s Liability exclusion in ISO CG 00 01 policies. Without this exception, usually tied to liability “assumed in an insured contract”, coverage for third-party claims arising from employee injury is erased.
Consider a typical construction job: A subcontractor’s employee falls from scaffolding and sues the general contractor. The GC turns to the subcontractor’s GL policy for defense, citing the indemnification clause. If the policy includes an Action Over exclusion, the insurer can decline coverage on the basis that the injury arose out of employment, regardless of the contractual obligation.
This is more than just a technicality. It’s a financial minefield. A six- or seven-figure injury claim may now be uninsured, and the retailer who placed that policy could be in the hot seat with both the GC and subcontractor.
From a retailer’s perspective, Action Over exposure demands careful diligence at the quoting stage. Many underwriters, especially from non-admitted markets, now include Action Over exclusions by default. It’s your job to know whether they’re present, how they operate, and whether they can be negotiated off the policy for accounts that require broader coverage.
It’s also essential to educate clients. Retailers should explain that a policy with Action Over coverage will likely cost more, especially for accounts in New York or involving height work. But that added cost is justified. A slightly higher premium upfront is far less expensive than an uncovered third-party bodily injury claim. The challenge lies in communicating this tradeoff to clients who may be conditioned to shop on price alone.
Many insureds and newer agents mistakenly believe that Action Over claims are limited to falls from height in NYC. In truth, these claims can arise anywhere in the country and from many causes: trench collapses, equipment malfunctions, chemical exposures, or even slips and trips that result in litigation. What matters is the contractual relationship and whether the GL policy covers the resulting liability.
Another misconception is that only contractors need to worry about Action Over. Consultants and engineers can also trigger these claims if they set foot on a job site and are injured during their work. If they’ve signed a broad form indemnity clause, the domino effect can be the same.
Many GCs believe that having strong indemnity language in place is sufficient. But that protection is only as good as the subcontractor’s insurance policy backing it. If that policy includes an Action Over exclusion, the indemnity clause becomes a hollow promise. The subcontractor may not have the assets to fulfill their obligations without insurance to fund the defense and settlement.
This is why retailers must go beyond certificates of insurance. A standard COI won’t tell you if an Action Over exclusion is present. Whenever possible, request and review the full Schedule of Forms and Endorsements or obtain a letter from the agent affirming that no Action Over exclusions apply. Some clients even require such language to be inserted directly into the certificate description section, a prudent practice in high-risk verticals.
As a wholesale broker and MGA, Novatae specializes in identifying and managing complex liability exposures. Our team works with retail agents to identify accounts where Action Over exclusions could create unacceptable gaps and sources carriers that offer either endorsements or standalone solutions to restore coverage.
We also help agents benchmark what’s market-available, negotiate coverage terms with underwriters, and structure program designs that reflect each insured’s actual risk profile, not just the perceived risk. Whether your client is a mid-sized GC, a niche subcontractor, or an owner-developer with unique exposures, our market access and underwriting insight can help you deliver smarter solutions.
In an increasingly litigious environment, insurance retailers have a responsibility to look beyond surface-level coverage and evaluate the real risk scenarios their clients face. Action Over exclusions are one of the most dangerous blind spots in a GL program, and one of the most likely to result in uncovered six-figure losses.
By prioritizing action over exclusion and education over assumption, you position yourself as a trusted advisor, not just a broker. And with Novatae as your partner, you gain access to markets and expertise that help you close gaps before they become problems.
If you’re not sure whether your client’s current GL policy includes Action Over exclusions, or you need help finding a solution that doesn’t, reach out to us today. We’ll help you assess the landscape and ensure you’re delivering real protection that holds up when it matters most.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.