Having the right tool for the job is imperative if you are in construction. Having the correct additional insured endorsement protecting your interest is absolutely critical, saving hundred's of thousands of dollars in most liability claims situations. The fact is most of the Development / General Contractor companies I consult with spend countless hours, and thousands of dollars on their construction contracts. Conversely the task of making sure there is a pool of capital from the sub-contractors in the event of a claim , as they flash that fancy contract is often overlooked or misunderstood. The goal of this article is to highlight the various differences between all the disperate additional insured endorsements, and make a recommendation as to which one you should request depending on which side of the transaction you fall on, and what you agreed upon in the contract you signed, and to whom. I will endeavor to give you the knowledge, you negotiate what you can in your companies best interest. If you have a staff person dedicated to managing the sub contractors Certs, make sure they book mark this post and download this table for future reference. Due to the software limitations I was unable to translate directly this table, so please down load the file for the rest of this to make sense.
Please click on this file to view and download : Evolving Coverage Standards for Additional Insured Endorsements Evolving Coverage Standar-2.doc
Some notes of interest on the various terms that have a substantial impact on the coverage afforded to the additional insureds. Pay attention to "your work" v.s. "your on going operations". "Your work" has been interpreted broadly to include both work in progress and work that has been completed. Thus the end result would be that coverage would be available to the additional insured (entity receiving the certificate) long after the work by the named insured ( entity issuing the certificate) has been done. Conversely if the Additional Insured endorsement only affords coverage for your "On Going Operations" , then once the job is complete your status as an additional insured ends, irrespective of how your contract reads with the sub, which is why it is critical that the sub-contractors policy meet the obligations set forth in the builder contract.
If you are a General Contractor / Developer/ or Building Owner CG 20 10 11/85 is the specific additional insured endorsement that you should require any construction entity below you on the food chain to carry for the reasons noted above.
If the carrier insuring the sub contractor or GC is unwilling to issue the CG 20 10 11/85 endorsement, you may request that the carrier issue CG 20 37 10/01 (Titled Additional Insured - Owners, Lessees Or Contractors Completed Operations. which adds the Products & Completed extension. without this endorsement, you will lose your status as an additional insured the moment the final check is cut, and the job is deemed complete by that particular sub-contractor or G.C. If you are the building owner. This is used in tandem with CG 20 10 ( Various Issuing Years). This is not as good as the (11/85) version because of the revised "arising out of " language was changed to "caused in whole or in part by acts or omissions of the named insured", which first appeared in the 2004 revisions. For more on that topic, I have devoted a whole article on the 2004 Additional Insured Revisions. Click here for the post (forthcoming).
If you are a Trade Sub-Contractor, I would think you would like your obligation to the job to cease once the work has been completed. Therefore it's in your best interest to use one of the narrower additional insured endorsements. If this is your chosen path, please be certain the contract you signed with the owner or G.C. is consistent with your narrow additional insured endorsement, other wise you will have promised contractually a dollar, but in effect will deliver only pennies. Remember, insurance is only a financial instrument meant to cover your contractual promises and obligations made to your clients. Make sure your insurance policies are designed and will meet the promises you have made, or you will not be in business long should you have an accident .
Comments