IIABNY says the enhanced requirement prohibits insurance that does not cover a contractor's legal liability for injuries or property damage resulting from:

• The contractor's completed work
• Explosions, collapses and work performed underground
• The contractor's agreement to pay for liability claims against another party
• Claims against another party for an injury to the contractor's employee
• Work on residential properties
• The use of a controversial finishing system for buildings' exteriors

Insurers have good reason for these exclusions from practical experience, says Brassard.

Exterior Finish Insulation System (EFIS), for example, has resulted in a number of lawsuits from rot and mold when a contractor fails to install an exterior finish properly. It is faulty workmanship, says Brassard, something the rules would cover, but insurers don't.

Then there is the issue of absolute liability where a property owner is responsible for an individual contractor's injury from a fall, despite any negligence on the part of the injured party. Insurers, says Brassard, are excluding that risk from policies.

The rules also require written notification of changes or cancellation of policies to the department, something insurers are not prepared to do.

While the department has good intentions, Brassard says, the market is not ready to write these risks, and that will create an enormous problem for contractors.

"This is a pretty big insurance nightmare for anyone who wants to do work in New York City," says Brassard. "A lot of what is being required isn't as simple as it seems. The intent is notable and worthy with what they are trying to accomplish. But the regulation they are promulgating will require coverage not available in the marketplace."

IIABNY is working to meet with the New York State Department of Insurance and Department of Buildings to discuss the reality of the insurance situation and work out a solution, says Brassard.