One more reason to fear construction site mishaps.

As an employer, you likely think your liability insurance covers you for any jobsite mishap. Well, you may need to think again.

The problem is what have come to be known as third party action-over claims, and they have the potential to create serious financial exposure beyond what a liability policy will address. Here’s an example:

On one of your construction sites, at which you’re acting as the general contractor, a subcontracting plumber’s employee breaks a leg. Worker’s compensation covers this employee, both for the injury and lost time on the job. The subcontractor is precluded from suing his employer directly because of employer protection under worker’s compensation laws.

However, the plumber’s employee can sue the jobsite owner, the general contractor, and other contractors on site who the injured employee alleges contributed to his injuries because of what he claims was an unsafe work environment. And because — under specific terms of your contractual agreement — you named the jobsite owner as an “additional insured” on your general liability insurance policy, liability is actually passed back to you. With luck, you’ll have similar protection down the chain from your subcontractor … but that isn’t necessarily the case.

“We explain to our clients the danger of these third party action-over claims, but they’re rather complex, and can be difficult to grasp,” explains Dan Borgna, vice president of Dale Group. “Fortunately, that’s where insurance professionals like the experts at Dale Group can help. We understand the nuances and can provide a product that will protect them, even in the most difficult of circumstances.”

What employers need to do is consult with an insurance broker about obtaining a liability insurance package that doesn’t include an employer’s liability exclusion. Any policy with this exclusion actually leaves its holder exposed to the type of claim outlined above.

“In one sense, these third party action-over claims are a problem for most employers, with a particular emphasis on the construction industry,” Borgna adds. “Obviously, if you’re hit with a claim that’s not covered by your current policy, it’s a big problem. But even if you’re fortune enough to avoid such a situation, these claims result in higher liability insurance rates for almost everyone.”