How General Contractors Can Secure Umbrella Coverage

In today’s regulatory landscape, general contractors face heightened legal exposure and risk management challenges, increasing their need for comprehensive insurance coverage. Umbrella liability insurance provides a necessary extra layer of protection above primary insurance policies, shielding construction businesses from large claims and legal judgments. 

But for general contractors, especially those operating in high-risk states like New York, securing umbrella coverage is becoming harder and more expensive. With rising claims severity, litigation trends and carrier pullback, many construction firms are finding their umbrella limits reduced, premiums increased or coverage declined altogether. 

Understanding what drives this market and how to strengthen your position can help you protect your balance sheet and stay competitive.

4 Proven Strategies to Improve Your Chances of Securing Umbrella Coverage

Creating a strong risk management profile can help your business improve its insurability and stay resilient in today’s ever-evolving risk landscape. Use the following best practices to increase your likelihood of securing umbrella liability coverage. 

1. Maintain detailed safety records

For construction businesses operating in New York, Labor Laws 240 and 241 impose strict liability on general contractors and property owners, leading to high-value claims from falls and jobsite injuries. Carriers are increasingly hesitant to offer excess coverage in this legal environment.

To position your business favorably in the market, you need to demonstrate your commitment to safety practices and to prioritizing your workers’ well-being at all times, whether they’re driving to the jobsite, working on scaffolds or operating heavy machinery. Maintain detailed safety documentation, regular training schedules and evidence of subcontractor compliance. Show underwriters that your business takes proactive steps to prevent jobsite injuries, from fall protection protocols to the use of personal protective equipment (PPE).

2. Present a clean loss history

Contractors with a history of large claims or frequent incidents are often considered ineligible for umbrella layers. Even one severe claim can disqualify you from traditional markets. To establish your business as a minimal risk to carriers,  present a clean, well-documented loss history. Provide clear explanations for any large claims and include corrective actions taken. Submit complete loss runs and highlight favorable trends in claims frequency and severity.

3. Implement effective subcontractor controls

General contractors who do not tightly manage subcontractor insurance and safety protocols often take on unintended liability. Umbrella carriers look closely at your subcontractor controls and contractual risk transfer practices, making it critical to strengthen your subcontractor agreements. Make sure to: 

• Require appropriate insurance limits.
• Verify additional insured endorsements and include clear indemnification clauses.
• Show that your contracts push liability down to the responsible parties.

Before beginning a construction project, make sure to carefully review your contracts to ensure the right language is in place, shielding your business from risk introduced by subcontractors. 

4.  Implement a documented fleet safety program

If you operate a large or poorly managed fleet, insurers may decline umbrella coverage due to elevated auto loss potential. Distracted driving claims and bodily injury lawsuits are among the leading drivers of umbrella losses today. To combat this, develop a fleet safety program, with robust loss control measures, and document these practices for insurers. Use these best practices: 

• Run motor vehicle records (MVRs) before assigning drivers.
• Conduct regular vehicle inspections to prevent mechanical failures.
• Train crews on distracted driving prevention.
• Provide insurers with telematics data if available to show safe driving habits.

Telematics doubles as a risk management and cost-saving strategy, helping your business to potentially lower insurance premiums and protect your bottom line. Technology like in-cab cameras can give contractors greater insight into driver behavior, allowing them to correct any negative behaviors and incentivize safe driving. This contributes to a strong safety culture and can help your business become a more attractive risk for underwriters.

3 Alternatives to Traditional Umbrella Coverage

As factors like the complex legal landscape contribute to limited coverage, it is important to explore alternatives to traditional umbrella coverage, so your business stays protected. The following policies can help to limit your exposure and strengthen your risk management program: 

1. Excess Liability with Higher Attachment Points: Some contractors opt for excess liability layers that begin above $5M or $10M in primary coverage. This may limit your exposure to only the largest claims while keeping premiums manageable.
   
   
2. Project-Specific Policies or Wrap-Ups: Owner-controlled or contractor-controlled insurance programs (OCIPs or CCIPs) may include excess liability coverage specific to the project. These wrap-up programs can help fill coverage gaps when umbrella policies are unavailable.
   
   
3. Captives or Risk Retention Groups: In some cases, large contractors explore alternative risk structures such as captives or participation in risk retention groups to access higher limits at more stable pricing.

As the leading specialty insurance broker, Alliant Construction knows how to navigate your business through all viable coverage options based on your unique risk profile to ensure you’re protected. 

How Alliant Construction Helps Contractors Secure Coverage

Umbrella coverage is becoming harder to secure for general contractors, but not impossible. By improving your safety performance, tightening subcontractor controls and working with a broker who understands the construction market, you can improve your access to excess liability protection. If umbrella coverage is not an option, there are still creative solutions available to manage catastrophic risk. 

At Alliant Construction, our team of insurance specialists work closely with general contractors to assess their risks and provide personalized, effective coverage that aligns with their needs. Reach out to Alliant Construction to evaluate your coverage options and protect your business from high-severity claims.