Action Over Exclusion: The Clause That Can Void Your Biggest Claim
Workers’ comp stops your employee from suing you. It does not stop them from suing the general contractor — who then sues you. That circular claim is where the action over exclusion does its damage.
- An action over claim happens when your injured employee sues a third party, and that third party sues you under a contractual indemnity.
- Workers’ comp exclusive remedy protects you from your employee, not from the general contractor they sue.
- The action over exclusion in a general liability policy removes coverage for exactly that scenario.
- It is most common on contractor policies from non-standard and surplus lines carriers.
- Most construction contracts require action over coverage — a policy carrying the exclusion cannot satisfy the contract you already signed.
How an action over claim actually unfolds
Your employee falls on a jobsite. Workers’ compensation pays their medical bills and lost wages, and exclusive remedy bars them from suing you. So their attorney sues someone who is not their employer: the general contractor, the property owner, the equipment supplier.
That defendant then turns to the indemnity clause in your subcontract — the one where you agreed to defend and indemnify them for injuries arising from your work — and tenders the claim back to you. Your employee’s injury has now become a liability claim against your general liability policy, arriving by a different door.
What the exclusion removes
An action over exclusion, sometimes appearing as an "injury to employees of insureds" or "employer’s liability exclusion — broad form" endorsement, bars coverage for bodily injury to your employees regardless of who is bringing the claim or under what theory.
That last phrase is the important one. A standard general liability employer’s liability exclusion contains a carve-back for liability assumed under an insured contract, which is what makes contractual indemnity coverable. The broad-form version deletes that carve-back. The result: the GC tenders a six-figure defence to you, and your carrier declines it.
Where you will find it
How to check your own policy in five minutes
Open the declarations page and find the schedule of forms and endorsements. Scan for any endorsement naming employees, employer’s liability, or "action over." Then read the exclusions section of the general liability coverage form for the employer’s liability exclusion and confirm the insured-contract carve-back is intact.
If you find an action over exclusion, three responses are possible: buy it back by endorsement where the carrier offers it, move the policy to a carrier that does not impose it, or renegotiate the indemnity in your subcontracts — which is usually the least achievable of the three, since the GC wrote the contract.
The New York problem, and why it matters everywhere
New York Labor Law §240 and §241 impose near-absolute liability on owners and general contractors for gravity-related construction injuries. That means the third-party suit is nearly guaranteed to succeed, and the indemnity tender to the subcontractor follows automatically. Action over exposure in New York is not a tail risk; it is the expected outcome of a serious fall.
Even outside New York the economics are the same, just less certain. An action over claim carries the severity of a workers’ compensation injury with the litigation cost of a liability suit, and it arrives at the one policy your GC assumed would respond.