He Was Named Additional Insured. The Subcontractor’s Injured Worker Still Sued Him for $600,000.

*7 min read · Last updated June 29, 2026*

In this article

– What additional insured status is supposed to do – The action-over lawsuit that breaks the chain – Where the action-over exclusion hides – How to close the gap before the contract is signed – Frequently asked questions

Marcus Bell ran a small general contracting firm and did everything his risk advisor told him to do. Before a framing subcontractor started on a custom home, Marcus required the sub to name his company as an additional insured on the sub’s general liability policy and collected a certificate of insurance proving it. Eight weeks in, one of the sub’s carpenters fell from a scaffold and broke his back. The carpenter collected workers’ compensation from the sub, then turned around and sued Marcus’s company for $600,000, claiming the GC failed to keep the site safe. Marcus tendered the claim to the sub’s insurer as an additional insured. The insurer denied it in one paragraph, citing an action-over exclusion. The coverage Marcus had carefully required was, for this exact lawsuit, worth nothing.

The denial was not a mistake or bad faith. The sub’s policy did everything it was written to do. Marcus had simply never been told that the most common serious lawsuit a general contractor faces, an injured worker’s suit, is the one many subcontractor policies are built to exclude.

What additional insured status is supposed to do

When a general contractor hires a subcontractor, the GC normally requires the sub to add the GC as an additional insured on the sub’s general liability policy. The idea is straightforward: if the sub’s work causes injury or damage, the sub’s insurer defends and pays for the GC too, rather than the GC’s own policy taking the hit. This shifts the risk down to the party doing the work, which is why nearly every construction contract demands it. The mechanics of how this endorsement is added are covered in additional insured endorsements for contractors.

In theory, that protection should cover the worst-case event on a job site, a worker getting hurt. In practice, that is the precise scenario where the protection can collapse. The reason is a feature of how injured-employee lawsuits travel through the system, and a matching exclusion that most subcontractor policies carry by default.

The action-over lawsuit that breaks the chain

Start with workers’ compensation. When the sub’s carpenter was injured, he collected workers’ comp from his own employer, the subcontractor. Workers’ comp is a no-fault deal: the worker gets medical bills and lost wages paid quickly, and in exchange he generally cannot sue his own employer. That bar protects the sub.

It does not protect the general contractor. The injured worker can still sue the GC, a third party, claiming the GC’s site safety failures caused the fall. That third-party suit against the GC is called an “action-over” claim, because the liability is being moved over from the employer to another party on the site. The GC, now a defendant, points to its additional-insured status on the sub’s policy and asks that insurer to defend and pay. The relationship between a hurt worker, comp, and a liability suit is laid out further in general liability insurance and employee injury.

Here is where it breaks. Insurers know action-over claims are how injured-worker losses leak from the cheap workers’ comp system into the expensive general liability system. So many GL policies add an exclusion that wipes out coverage for any claim arising from injury to an employee of the named insured, including when that injury is brought against an additional insured. The sub’s carpenter is an employee of the named insured. The exclusion applies. The GC’s additional-insured status is real, but the underlying policy refuses the one claim the GC needed it for.

Where the action-over exclusion hides

The trap is that nothing on the certificate of insurance reveals this. A certificate is a one-page summary that lists policy numbers, limits, and the additional-insured box checked. It does not reproduce the exclusions. Marcus held a certificate that looked perfect. The action-over exclusion lived in the policy itself, on a form he never saw.

These exclusions go by several names on the actual policy: “Injury to Employees, Contractors, Volunteers and Other Workers,” “cross-suits,” or a broad employer’s liability exclusion stripped of its usual carve-back. Each version is slightly different, but the effect on the GC is the same. The coverage that survives is often only for completed-operations defects, the kind described in completed operations coverage for contractors, not for an injured worker mid-project.

A GC who only collects certificates is collecting proof that a policy exists, not proof that it will respond. For the single biggest exposure on a job site, those are very different things.

How to close the gap before the contract is signed

The protection is available, but it has to be demanded specifically and verified. First, write the subcontract to require that the sub’s GL policy contain no action-over or cross-suit exclusion, or that the exclusion be bought back by endorsement. Many carriers will remove or modify it for a premium, and a sub that refuses is telling you something about its coverage.

Second, ask for the actual additional-insured endorsement form and the policy’s exclusions page, not just the certificate. If the sub or its agent will not produce them, treat that as a red flag. Third, confirm the additional-insured endorsement extends to both ongoing and completed operations, so the coverage does not vanish the day the sub leaves the site.

Marcus’s company survived, but only because its own general liability policy ultimately responded, raising his future premiums and consuming a large deductible for a loss that should have sat entirely on the sub. The cheapest moment to fix an action-over gap is before the subcontractor ever sets foot on the job. Once a worker is on the ground, the exclusion is already written, and the lawsuit is already yours.

Frequently asked questions

What is an action-over claim in construction? It is a lawsuit by an injured worker against a party other than their direct employer, usually the general contractor or project owner. The worker collects workers’ compensation from their employer, who cannot be sued, then sues the GC as a third party for failing to keep the site safe. The liability moves “over” from the employer to the GC.

Does additional insured status protect a general contractor from a subcontractor’s injured employee? Only if the subcontractor’s policy does not carry an action-over exclusion. If it does, the insurer can deny the general contractor’s claim even though the GC is a named additional insured, because the injury was to an employee of the policyholder. The additional-insured status is real but the underlying coverage refuses that claim.

What is the action-over exclusion on a general liability policy? It is policy language that removes coverage for bodily injury to an employee of the named insured, including suits brought against additional insureds. Insurers add it to stop injured-worker losses from moving out of workers’ compensation and into general liability. It is common on subcontractor policies and is rarely shown on a certificate of insurance.

How do I make sure a subcontractor’s insurance actually protects me? Require in the contract that the sub carry GL with no action-over or cross-suit exclusion, then verify it by reading the actual policy form and additional-insured endorsement, not just the certificate. Confirm the endorsement covers both ongoing and completed operations. A certificate alone is not proof the policy will pay.

Will my own general liability policy cover an action-over lawsuit? Often yes, which is what saves many contractors, but it comes at a cost. Using your own policy raises your future premiums, burns your deductible, and uses up limits meant for other risks. The point of requiring the sub’s coverage is to keep that loss off your own policy entirely.