The Importance of Insurance in Access Agreements
Granting construction access to a neighboring property comes with inherent risks, including structural damage, personal injury, and environmental hazards. Insurance provisions in access agreements serve as a safeguard, ensuring that any damages, claims, or liabilities arising from the work are properly covered. Failing to include robust insurance terms can leave property owners financially exposed and developers vulnerable to costly disputes.
Key Insurance Provisions in Access Agreements
A well-drafted access agreement should include the following insurance requirements:
- General Liability Insurance
- Covers bodily injury, property damage, and third-party claims arising from construction activities.
- Standard coverage amounts typically range from $1 million to $5 million per occurrence, depending on the scope of work.
- Builder’s Risk Insurance
- Protects against physical damage to the project, including fire, vandalism, and weather-related losses.
- Ensures that unforeseen incidents do not result in project delays or financial setbacks.
- Worker’s Compensation Insurance
- Required under New York law to cover medical expenses and lost wages for workers injured on-site.
- Shields property owners from potential liability for injuries to construction personnel.
- Excess or Umbrella Liability Insurance
- Provides additional coverage beyond general liability limits.
- Useful for high-risk construction projects with potential for large claims.
- Pollution Liability Insurance
- Covers environmental damage, including contamination or hazardous material exposure during construction.
- Particularly important for projects involving excavation, demolition, or older structures with asbestos.
- Indemnification Clauses
- Defines who bears financial responsibility for claims or damages.
- Helps shift liability away from property owners when construction-related incidents occur.
Risks of Inadequate Insurance Coverage
Failing to include proper insurance provisions in an access agreement can lead to significant risks, including:
- Uncovered Damages: Without proper coverage, property owners may bear the costs of structural damage caused by construction activities.
- Legal Liability: If a worker is injured or a third party files a claim, the absence of sufficient coverage can result in expensive litigation.
- Project Delays: Insufficient insurance may prevent construction from proceeding, as property owners may refuse access until adequate policies are in place.
Negotiating Strong Insurance Terms
To ensure a construction access agreement provides adequate protection, property owners and developers should:
- Require Certificates of Insurance (COIs)
- Verify all necessary policies are in place before granting access.
- Specify Additional Insured Status
- Property owners should be listed as additional insureds on the contractor’s policies to extend liability protection.
- Mandate Sufficient Coverage Limits
- Insurance limits should reflect the scale and risk of the construction project.
- Include Waivers of Subrogation
- Prevents insurers from suing property owners after paying claims related to construction activities.
- Consult Legal and Insurance Professionals
- Working with experienced attorneys and insurance brokers ensures comprehensive protection.
How James J. Corbett, P.C. Can Help
At James J. Corbett, P.C., we understand the complexities of insurance provisions in construction access agreements. We assist property owners and developers in drafting, reviewing, and negotiating agreements that provide strong insurance protections. By ensuring that insurance terms are clear and enforceable, we help clients minimize risk and avoid costly disputes.
Contact us today to discuss your construction access agreement and ensure your insurance requirements are properly structured.
