The "Additional Insured" Status of Subcontractors
Additional Insured Status
The "additional insured" status of subcontractors is becoming a very common problem in the construction industry and you should be aware of the implications.
Most contractors require an "additional insured" status from their subcontractors, and subcontractors in turn require this status from their subcontractors and so forth. The process typically goes like this:
- Additional insured status is requested by contractor.
- Additional insured is either accepted or denied by the insurance carrier.
- If accepted, the "additional insured" is endorsed on to the policy, a certificate is sent to the contractor, work begins and everyone is happy.
That is until a claim occurs and the additional insured discovers that the endorsement specifically excludes coverage for "completed operations."
The Insurance Services Office provides the standard "additional insured" endorsement, having released several variations of the endorsement over the last few years. However many insurance carriers have addressed the problem differently, choosing instead to write their own specific endorsement forms. That is why, regardless of whether you are the additional insured or the one requesting the endorsement, you must know exactly what the endorsement says.
The concept behind this endorsement is simple: to extend coverage to those who are not directly responsible for the claim but may be contractually connected to it. But claims handling and litigation often turn this simple concept into a giant donnybrook of carriers, contractors, subcontractors and attorneys.
To avoid this situation, schedule a review with one of our risk managers today. We will review your requests and endorsements to be certain you are being provided with the coverage you need.