Explain the different Additional Insured endorsements
Additional Insured (AI) endorsements in commercial insurance extend coverage to individuals or entities not originally named in the policy. These endorsements protect the additional insured from claims arising from the named insured's operations or activities. However, the scope and applicability of coverage vary depending on the type of AI endorsement used. Here’s an explanation of the different types of Additional Insured endorsements commonly found in commercial general liability (CGL) policies:
1. Specific Additional Insured Endorsements
These endorsements name a specific person or entity as an additional insured. Coverage applies only to that particular party and only under certain conditions.
Example:
CG 20 10 (11/85): Broad form covering the additional insured for ongoing and completed operations.
2. Blanket Additional Insured Endorsements
Instead of naming a specific additional insured, this endorsement provides coverage for any party the insured has agreed to include as an AI in a written contract or agreement.
Key Features:
Automatically applies to parties meeting the contract/agreement criteria.
Simplifies administration by avoiding the need for separate endorsements for each additional insured.
Example:
CG 20 33: Blanket endorsement covering parties required by written contract, limited to ongoing operations.
3. Ongoing Operations Endorsements
These endorsements cover the additional insured only for liability arising from the named insured's ongoing operations. Once the work is completed, coverage typically ceases.
Key Features:
Does not cover completed operations.
Protects against liabilities like injuries caused during work in progress.
Common Form:
CG 20 10 (07/04): Covers additional insured for liability due to ongoing operations only.
4. Completed Operations Endorsements
These endorsements provide coverage to the additional insured for claims arising from the named insured’s completed work. This is particularly important for industries like construction, where defects or damages might arise after a project is finished.
Key Features:
Covers liabilities related to completed work (e.g., faulty installation causing damage).
Often required in construction contracts.
Common Form:
CG 20 37: Covers completed operations liabilities for additional insureds.
5. Owners, Lessees, or Contractors Endorsements
These endorsements are specific to construction or maintenance projects. They extend coverage to property owners, general contractors, or lessees for liability arising from the named insured’s work on their behalf.
Common Forms:
CG 20 10: Covers property owners or contractors for ongoing operations.
CG 20 37: Covers property owners or contractors for completed operations.
When Used:
For contractors performing work on a client’s property.
6. Designated Premises Endorsements
These endorsements limit coverage to liabilities arising from the named insured's activities on specific premises owned, rented, or occupied by the additional insured.
When Used:
For landlords or property owners who want coverage for liabilities arising from tenant activities on leased property.
7. Vendors Endorsements
These endorsements extend coverage to product vendors who distribute or sell the named insured’s products. They protect vendors from liability for injuries or damages caused by the insured’s defective products.
Common Form:
CG 20 15: Vendors endorsement covers claims arising from the sale or distribution of the named insured’s products.
8. Lessor of Leased Equipment Endorsements
This endorsement provides coverage for lessors of equipment used by the named insured. It protects the lessor from liability arising out of the named insured's use of the leased equipment.
Common Form:
CG 20 28: Covers equipment lessors as additional insureds for liabilities arising from equipment use.
9. Loan Agreements Endorsements
These endorsements extend coverage to financial institutions (e.g., mortgagees or lenders) that have an insurable interest in the named insured's property or operations.
When Used:
To fulfill loan agreement requirements, such as protecting lenders from liabilities tied to the insured’s operations.
Key Considerations When Using Additional Insured Endorsements
Scope of Coverage:
Coverage is often limited to liabilities arising from the named insured’s negligence and does not cover the additional insured’s independent negligence.
Primary and Non-Contributory Language:
Many contracts require the additional insured’s coverage to be primary and non-contributory, meaning the named insured’s policy must respond first before the additional insured’s policy contributes.
Coverage Limits:
Additional insureds share the policy limits with the named insured, which can deplete coverage in the event of large claims.
Exclusions:
Some endorsements exclude certain risks, such as professional liability or pollution liability.
Contract Requirements:
Ensure the AI endorsement aligns with the specific language and requirements of the contract or agreement.
Summary of Common AI Endorsements
EndorsementCoverage ScopeUse CaseCG 20 10Ongoing operations (older forms include completed operations).General contractors, property owners.CG 20 37Completed operations.Construction projects after completion.CG 20 33Blanket endorsement for ongoing operations.Simplifies contracts with multiple parties.CG 20 15Vendors for product liability.Manufacturers working with distributors.CG 20 28Leased equipment liability.Equipment rental companies.
By understanding the different types of additional insured endorsements, businesses can ensure their contracts and insurance policies align, protecting all parties involved in the scope of work or operations.
