Simon Glairy is a distinguished authority in the complex intersections of insurance law and large-scale commercial litigation, particularly within the high-stakes New York construction market. With years of experience navigating the labyrinth of risk management and AI-integrated assessment, he has become a go-to expert for understanding how contractual obligations translate into courtroom battles. His insights are particularly timely as major developers and insurers grapple with the financial fallout of multi-party disputes and the shifting tides of statutory liability.
How do New York Labor Law Sections 240 and 241(6) shape the liability landscape for property owners during gravity-related construction accidents? What specific strategies should developers use to mitigate these high-stakes risks when multiple subcontractors, such as plumbing and masonry teams, are involved?
New York’s Labor Law Section 240, often called the “Scaffold Law,” creates a unique environment where property owners and general contractors face nearly absolute liability for elevation-related injuries. When a worker, like a mechanic from a plumbing firm, falls from a height, the statutes place the financial burden on the owner regardless of the worker’s own negligence. To mitigate this, developers must ensure their contracts are ironclad, requiring every subcontractor—whether they are handling masonry or sprinklers—to provide comprehensive indemnification. It is not enough to simply have a contract; developers must actively verify that these subcontractors maintain commercial general liability policies that specifically name the owner as an additional insured. By layering these protections, the developer ensures that the primary financial responsibility shifts away from their own balance sheet and onto the carriers of the parties performing the actual work.
When a subcontract requires “primary and non-contributory” coverage for additional insureds, what technical hurdles often prevent carriers from fulfilling these obligations? How do you resolve disputes when a general liability carrier claims its coverage is strictly excess to the subcontractors’ policies?
The primary hurdle is the interpretation of “other insurance” clauses within the policies themselves, which can lead to a standoff between carriers. Even when a subcontract explicitly demands primary and non-contributory status, a carrier might argue that their policy is only triggered if their specific policyholder is directly negligent. In a recent federal case in the Southern District of New York, we see an insurer like Liberty Mutual forced to sue three other carriers—Travelers, New York Marine, and State National—because each refused to step up. Resolving these disputes often requires a forensic look at the “insurance tower” to prove that the subcontractors’ policies must be exhausted before the owner’s own insurance is even touched. When carriers remain silent for years or issue blanket denials, the only path forward is often a declaratory judgment action to legally establish the priority of coverage.
Some carriers deny additional insured coverage until a final determination of fault is made regarding their specific policyholder’s work. How does this strategy impact the initial defense costs, and what legal mechanisms allow an excess insurer to recover expenses paid during these multi-year delays?
This “wait and see” strategy is a tactical move by carriers to avoid the immediate, heavy outflow of cash required for legal defense, which can stretch over several years in New York’s court system. By denying coverage until a final determination of fault, the carrier effectively forces the owner’s own insurer to foot the bill for attorneys, experts, and filings in the interim. This creates a massive financial imbalance, as seen when one insurer carries the defense load for an incident occurring as far back as October 2019. To recover these funds, the insurer that paid must file a lawsuit seeking a monetary judgment for all defense costs incurred. They rely on the principle of equitable subrogation, asserting that because they fulfilled a duty that legally belonged to another, they are entitled to a dollar-for-dollar reimbursement of those expenditures.
On projects involving general contractors and various specialized trades, how should the insurance tower be structured to avoid litigation? What steps can be taken during the tender process to ensure carriers respond to defense requests promptly rather than remaining silent for years?
To avoid litigation, the insurance tower must be built on a foundation of clear, prioritized language that leaves no room for “silent” denials. Every subcontract should explicitly state that the subcontractor’s insurance is primary to any other insurance available to the additional insured, regardless of any “other insurance” clauses in the subcontractor’s own policy. During the tender process, it is vital to provide carriers with a complete “tender package” including the incident report, the summons, and the specific subcontract language as early as possible. If a carrier remains unresponsive after a tender is made—like the two-year silence alleged against some carriers in recent Bronx litigation—the project owner must be prepared to escalate the matter to senior claims management or legal counsel immediately. Proactive tracking of these tenders ensures that carriers are held accountable to the timelines mandated by state insurance regulations.
What are the long-term implications for the construction industry when primary carriers ignore tenders, forcing federal lawsuits? Can you walk through the process of seeking a declaratory judgment for defense costs and the metrics used to calculate monetary damages in these disputes?
When primary carriers ignore tenders, it erodes trust within the industry and leads to increased premiums as insurers account for the high cost of “coverage-on-coverage” litigation. Seeking a declaratory judgment involves asking a federal judge to interpret the insurance contracts and issue a binding ruling on which carrier has the “duty to defend.” This legal process requires demonstrating that the underlying injury claims—such as those filed by an injured plumber—fall within the scope of the subcontractor’s work. To calculate monetary damages, the court looks at the actual legal invoices paid, ensuring the rates were reasonable and the work was necessary for the defense. This creates a clear financial ledger that forces the defaulting carriers to pay back every cent of the defense costs they should have covered from the start.
What is your forecast for construction-related insurance litigation?
I predict a significant rise in “vertical” litigation where excess and primary insurers will increasingly use federal courts to settle priority-of-coverage disputes before the underlying personal injury cases even reach a jury. As New York Labor Law claims become more expensive, carriers will become more aggressive in protecting their “excess” positions to avoid being the first ones to pay out. We will see a shift toward more automated and AI-driven compliance checking for additional insured endorsements during the pre-construction phase to prevent these gaps from occurring. Ultimately, the industry will have to move toward more standardized “wrap-up” insurance programs where one policy covers all parties on a site, simply because the current model of fragmented policies and endless tenders is becoming too costly to sustain in a litigious environment.
