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Very simply stated, the requesting party is saying "
If you screw up (cause bodily injury or property damage) and I get sued, I expect your policy to protect me." 
  

The Additional Insured requirement is very common in construction.  Let's say a building owner needs Electrical upgrades.  The Owner contacts a General Contractor (GC) to handle the project.   The GC, in turn, asks an Electrical Contractor to bid the job and then hires them.

However, in order to get the job, the GC requires the Electrician to agree to terms of a construction contract.  The contract requires all subcontractors to name the General Contractor as an Additional Insured (AI) and prove as much with a Certificate of Insurance (COI)

The Electrical Contractor calls their Insurance Agent, tells them to issue a COI with the GC listed as an AI and send to the GC. 

Now, the Electrician is good to go. Yes? Maybe, but maybe not – it depends on the type of AI endorsement that is required. 

Pages could be written on the subject of AI endorsements, but I have no interest other than to say  –  it is imperative that your Insurance Agent requests a copy of the construction contract, prior to issuing the COI, to determine what you are agreeing to and which AI endorsement(s) is needed for compliance.

If your policy is not set up with the correct AI endorsement(s) you could find yourself with an Uninsured claim.   

The argument could be made that the GC accepted the Certificate of Insurance you furnished  and allowed you to start work. BUT, you agreed, in writing (with your signature) to the terms of the GC’s Construction Contract.  

Now, there is claim against the GC that they point out you agreed to protect them from.  However, your policy will not respond because it is not properly endorsed.  Per the contract, you have agreed to cover the loss, but, you do not have the benefit of an Insurance Company stroking the check for you.   Depending on what the claim is  - this could devastating.


If you have an employee handle the Certificate of Insurance requests for your business, the "Share" button below includes an email option.  This post can be emailed, and dare I say, one day prove priceless.   If you have additional concerns you may contact me here: contact me 


Do you see what I've done there with the photo? - that's suppose to be the signing of the Construction Contract - good stuff with a stock photo, yes?  

 

Posted by Dan@hebbeln-ins.com

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744 Spirit of St Louis Blvd, Suite H
Chesterfield, MO 63005
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