Navigating your insurance rights, duties and obligations in the New York Construction Industry can be difficult. For those without in house counsel, contractual insurance obligations and indemnification obligations may be difficult to understand. When risk is not understood, it cannot be effectively priced leading to potential problems down the line where more risk was taken on than the contract price justifies. It can also be difficult (if not near impossible) to understand some of the insurance policies that are written to construction professionals in New York. This informational presentation will hopefully guide you through some of the more common and complex issues that confront the construction industry on a day-to-day basis:
Kushnick Pallaci, PLLC is a full service law firm serving the construction industry across the State of New York from its Buffalo and Long Island offices.
Showing posts with label Indemnification. Show all posts
Showing posts with label Indemnification. Show all posts
Monday, April 22, 2013
Wednesday, March 23, 2011
Contracts indemnifying third parties may be voided by law
The New York legislature has proposed bill A05026 wherein General Obligations Law Section 5-322.1 would be amended to forbid an agreement to indemnify a promisee for damages caused by third party negligence. Section 5-322.1 already forbids indemnification agreements that seek to indemnify the promisee for the promisee's own negligence but this law would extend that prohibition to indemnification of third parties. The legislature has stated that part of the justification for this amendment is that a "subcontractor should be responsible for its own negligence but not for the negligence of unrelated third parties."
Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law. He can be reached at (631) 752-7100 or vtp@kushnicklaw.com
Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law. He can be reached at (631) 752-7100 or vtp@kushnicklaw.com
Saturday, May 22, 2010
What to do if someone was injured on your construction site in New York
Injuries are an unfortunate part of construction. Whether it is an injured worker or just someone passing through, injuries can have a devastating impact on contractors. After dealing with the immediate medical needs, the contract must turn its attention to legal concerns.
1. Document the Injury
It is a good practice to have witnesses to the accident that caused the injury fill out accident reports. Get basic contact information for the witness and have them put a statement in writing. A copy of the accident report should be kept on file for at least three years after the injury.
2. Put Your Insurance Carrier On Notice
You bought that insurance policy for a reason - now its time to pull it out and put it to use. If you don't have a copy, contact your broker or the insurer directly. Every policy has a notice section, look at it and make sure you comply with it exactly. Notice should always be in writing and at least one copy of the letter should be sent via certified mail or any other means that allows you to confirm receipt. Notice is a very important aspect of submitting a claim to your insurer so, if possible, have your attorney or broker submit the claim for you. Do not wait until you are served with a complaint to put your carrier on notice. Notice should happen within a few days of the injury.
3. Follow Up With Your Insurance Carrier
After you send the written notice to the carrier, follow up with a phone call in about 7 days. Confirm that the carrier has received the claim and try to get your claim number. Write the claim number down and write down the name of the person that you spoke to. If a claims examiner or adjuster has been assigned, get that persons contact information and write it down.
4. Follow For A Coverage Position Letter
If no claim has been made against you, your carrier may not take a position with regards to whether there will be coverage. Anything that they send you should be keep in a safe place for at least 3 years from the time of the injury. Request that your carrier confirm all coverage matters in writing.
5. Notify Your Carrier If A Claim Is Made Against You
You may be served with a summons and complaint or you may just get a letter from an attorney advising that a claim is going to be filed. In either scenario, immediately notify your insurance carrier in writing (even if you already put them on notice of the injury). Again, follow up in 7 days as set forth in Step 3 above.
6. Request A Written Coverage Position Letter
Once you get the letter, read it carefully. It is a good idea to have your attorney or broker read it over. If the letter accepts the claim and the carrier agrees to defend you, simply follow their instructions. Your insurance carrier will assign you defense counsel and pay them directly. Cooperate with your insurer and defense counsel in handling the case. If the coverage letter does not accept coverage, immediately advise your broker and at that point it is strongly advisable to speak to an attorney.
7. What if My Carrier "Reserves Their Rights"
Sometimes insurance companies will make a "reservation of rights." Basically this means that they are going to defend you for the time being but that they reserve their right to withdraw at any time if they determine that it is not a covered loss. If your insurance company takes this position, you should immediately consult an attorney. In this scenario, under New York law you have the right to chose you own defense counsel (as opposed to accepting counsel appointed by the insurer) at your insurance carrier's cost.
When in doubt, contact your attorney. Vincent T. Pallaci and the law firm of Kushnick & Associates, P.C. represents contractors in actions against insurance companies that wrongly disclaim coverage. For more information visit us at http://www.nyconstructionlaw.com/ or contact me at vtp@nyconstructionlaw.com
1. Document the Injury
It is a good practice to have witnesses to the accident that caused the injury fill out accident reports. Get basic contact information for the witness and have them put a statement in writing. A copy of the accident report should be kept on file for at least three years after the injury.
2. Put Your Insurance Carrier On Notice
You bought that insurance policy for a reason - now its time to pull it out and put it to use. If you don't have a copy, contact your broker or the insurer directly. Every policy has a notice section, look at it and make sure you comply with it exactly. Notice should always be in writing and at least one copy of the letter should be sent via certified mail or any other means that allows you to confirm receipt. Notice is a very important aspect of submitting a claim to your insurer so, if possible, have your attorney or broker submit the claim for you. Do not wait until you are served with a complaint to put your carrier on notice. Notice should happen within a few days of the injury.
3. Follow Up With Your Insurance Carrier
After you send the written notice to the carrier, follow up with a phone call in about 7 days. Confirm that the carrier has received the claim and try to get your claim number. Write the claim number down and write down the name of the person that you spoke to. If a claims examiner or adjuster has been assigned, get that persons contact information and write it down.
4. Follow For A Coverage Position Letter
If no claim has been made against you, your carrier may not take a position with regards to whether there will be coverage. Anything that they send you should be keep in a safe place for at least 3 years from the time of the injury. Request that your carrier confirm all coverage matters in writing.
5. Notify Your Carrier If A Claim Is Made Against You
You may be served with a summons and complaint or you may just get a letter from an attorney advising that a claim is going to be filed. In either scenario, immediately notify your insurance carrier in writing (even if you already put them on notice of the injury). Again, follow up in 7 days as set forth in Step 3 above.
6. Request A Written Coverage Position Letter
Once you get the letter, read it carefully. It is a good idea to have your attorney or broker read it over. If the letter accepts the claim and the carrier agrees to defend you, simply follow their instructions. Your insurance carrier will assign you defense counsel and pay them directly. Cooperate with your insurer and defense counsel in handling the case. If the coverage letter does not accept coverage, immediately advise your broker and at that point it is strongly advisable to speak to an attorney.
7. What if My Carrier "Reserves Their Rights"
Sometimes insurance companies will make a "reservation of rights." Basically this means that they are going to defend you for the time being but that they reserve their right to withdraw at any time if they determine that it is not a covered loss. If your insurance company takes this position, you should immediately consult an attorney. In this scenario, under New York law you have the right to chose you own defense counsel (as opposed to accepting counsel appointed by the insurer) at your insurance carrier's cost.
When in doubt, contact your attorney. Vincent T. Pallaci and the law firm of Kushnick & Associates, P.C. represents contractors in actions against insurance companies that wrongly disclaim coverage. For more information visit us at http://www.nyconstructionlaw.com/ or contact me at vtp@nyconstructionlaw.com
How to Draft A Construction Contract that Protects You in a Tough Economy
The slumping economy has hit contractors hard, especially small to mid size firms that concentrate on residential construction. There are a few simple things that you, the contractor, can do to protect your business and minimize the negative impact of customers that do not pay.
1. Put All Contracts in Writing
Never enter into an oral agreement because the exact terms almost always change through the course of the project. In the instance of residential construction, you are actually required to have your contract in writing in almost every jurisdiction in NY. But even in non-residential construction it is best to put your contract in writing so that you and the client know exactly what is expected.
2. Be Very Precise with Your Scope of Work
In a bad economy there are, unfortunately, some owners that will try to take advantage of the situation because they know that contractors are hurting. One way that owners can try to "squeeze" the contractor is be increasing the amount of work that is going to be done and claiming that it should have been included in the original contract price. Your scope of work should be as detailed as possible and list the type of materials that will be used. If the owner wants an upgrade on a certain item you can go back to the contract and point out that the upgrade is going to increase the costs.
3. Put an Attorneys' Fees Provision In the Contract
In New York, in almost every situation, you cannot recover your attorneys fees in bringing a lawsuit to collect money that is owed to you unless your contract has a provision allowing you to do so. Especially in a bad economy the attorneys' fees can be the breaking point in determining whether to move forward and collect on a case or write it off as bad debt. Attorneys fees provisions are particularly important in smaller disputes because it does not make sense to file a lawsuit if it will cost you more to file than you will eventually recover.
4. Consider Adding an Arbitration Provision to the Contract
There are differing views on whether arbitration is cheaper than litigation. However, the American Arbitration Association recently restructured their construction arbitration fees so that parties do not have to pay so much up front to file for arbitration. The high initial fee to commence arbitration was one of the big down sides to arbitration but with the new fee schedule there is less of an up front risk to file for the arbitration. Also, in general, the attorneys fees that you incur during the arbitration process should be lower than those for litigation. This is mostly because there is less "discovery" done in an arbitration than in litigation and there are court conferences that can quickly cause a legal bill to expand exponentially.
5. Insert a Contractual Provision Regarding Late Payments
If the owner is late in paying you there should be some protections built into the contract. Some common protection mechanism's are: 1) a provision allowing you to charge interest; 2) a provision allowing you to suspend work without penalty if payments are more than 30 days late; and 3) a provision allowing you to charge the owner for mobilization and de-mobilization caused by delayed payments.
6. Give Consequential Damages Some Consideration
Remember that the tough economy is hurting you too so there may be some situations where you cannot complete a project on time because of cash flow problems. If you are not able to complete the project or not able to complete it on time you may be liable to the owner for any damages that flow from your breach or delay. For that reason, it may be in your best interest to insert a provision into the contract that states all parties are waiving their right to pursue any consequential damages (one of the most commonly sought types of consequential damages in construction projects are lost rental income).
7. Visit Your Attorney
Litigation is extremely expensive. It is much more cost effective for you to visit your attorney and have him or her review your contract to make sure that it provides you with as much protection as possible before the project starts than to visit that attorney after a problem develops and you are left scrambling to recover your fees. If you use a standard form contract it is worth it for you to have your attorney spend a few hours revising it to make sure it provides you with maximum protection. For contracts on larger jobs it is always a good idea to have your attorney review that specific contract before signing.
Vincent T. Pallaci is a New York construction lawyer. For more information on how to draft a contract that protects you visit us at http://www.nyconstructionlaw.com/ or contact me at vtp@nyconstructionlaw.com
1. Put All Contracts in Writing
Never enter into an oral agreement because the exact terms almost always change through the course of the project. In the instance of residential construction, you are actually required to have your contract in writing in almost every jurisdiction in NY. But even in non-residential construction it is best to put your contract in writing so that you and the client know exactly what is expected.
2. Be Very Precise with Your Scope of Work
In a bad economy there are, unfortunately, some owners that will try to take advantage of the situation because they know that contractors are hurting. One way that owners can try to "squeeze" the contractor is be increasing the amount of work that is going to be done and claiming that it should have been included in the original contract price. Your scope of work should be as detailed as possible and list the type of materials that will be used. If the owner wants an upgrade on a certain item you can go back to the contract and point out that the upgrade is going to increase the costs.
3. Put an Attorneys' Fees Provision In the Contract
In New York, in almost every situation, you cannot recover your attorneys fees in bringing a lawsuit to collect money that is owed to you unless your contract has a provision allowing you to do so. Especially in a bad economy the attorneys' fees can be the breaking point in determining whether to move forward and collect on a case or write it off as bad debt. Attorneys fees provisions are particularly important in smaller disputes because it does not make sense to file a lawsuit if it will cost you more to file than you will eventually recover.
4. Consider Adding an Arbitration Provision to the Contract
There are differing views on whether arbitration is cheaper than litigation. However, the American Arbitration Association recently restructured their construction arbitration fees so that parties do not have to pay so much up front to file for arbitration. The high initial fee to commence arbitration was one of the big down sides to arbitration but with the new fee schedule there is less of an up front risk to file for the arbitration. Also, in general, the attorneys fees that you incur during the arbitration process should be lower than those for litigation. This is mostly because there is less "discovery" done in an arbitration than in litigation and there are court conferences that can quickly cause a legal bill to expand exponentially.
5. Insert a Contractual Provision Regarding Late Payments
If the owner is late in paying you there should be some protections built into the contract. Some common protection mechanism's are: 1) a provision allowing you to charge interest; 2) a provision allowing you to suspend work without penalty if payments are more than 30 days late; and 3) a provision allowing you to charge the owner for mobilization and de-mobilization caused by delayed payments.
6. Give Consequential Damages Some Consideration
Remember that the tough economy is hurting you too so there may be some situations where you cannot complete a project on time because of cash flow problems. If you are not able to complete the project or not able to complete it on time you may be liable to the owner for any damages that flow from your breach or delay. For that reason, it may be in your best interest to insert a provision into the contract that states all parties are waiving their right to pursue any consequential damages (one of the most commonly sought types of consequential damages in construction projects are lost rental income).
7. Visit Your Attorney
Litigation is extremely expensive. It is much more cost effective for you to visit your attorney and have him or her review your contract to make sure that it provides you with as much protection as possible before the project starts than to visit that attorney after a problem develops and you are left scrambling to recover your fees. If you use a standard form contract it is worth it for you to have your attorney spend a few hours revising it to make sure it provides you with maximum protection. For contracts on larger jobs it is always a good idea to have your attorney review that specific contract before signing.
Vincent T. Pallaci is a New York construction lawyer. For more information on how to draft a contract that protects you visit us at http://www.nyconstructionlaw.com/ or contact me at vtp@nyconstructionlaw.com
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