Additional Insured Status—One Size Does Not Fit All

Background: As a general contractor, or even as a subcontractor hiring lower tier subcontractors, or to the extent your company retains a contractor for constructed improvements, in addition to requiring a written contract, additional insured status under that someone else's Commercial General Liability Insurance policy is an appealing option.

To get insurance coverage from someone else’s policy, it is important to make sure you are getting the coverage for which you bargained. It might seem easy to simply insert a requirement in your contract form that the other party acquire a policy which grants additional insured status to you. However, this does not mean that the other party actually obtained the policy, or even if it did, that it gave you additional insured status.  If the other party failed to do either of those things, you might have a breach of contract claim against the other party, but you would not have the coverage you wanted.

As confirmation of coverage, people often require a certificate of insurance indicating their additional insured status on a policy.  A certificate of insurance is not merely sufficient either as it does not necessarily contain the details regarding your status as additional insured, the specific coverage you have as an additional insured, and the coverage generally available under the policy.  Typically, additional insured status is granted through the addition of an endorsement to the policy, which provides some of the needed detail. However, even obtaining a copy of the endorsement purportedly granting you additional insured status is insufficient.  To be sure you have the coverage you barged for, you should get and review a complete copy of the policy, with all endorsements.

Unless you review a complete copy of the policy, there are countless ways something you did not review could deprive you of the coverage you thought you had.  For example, while you might receive a copy of an endorsement granting you coverage under the policy, another endorsement might strip your coverage for claims that do not surface until after the work was complete.  Or, even if you are covered to the full extent of the coverage under the policy, if the main body of the policy contains an exclusion for residential projects and the project at issue is a residential building, you might be an additional insured on a policy that does not provide any coverage for your project.  In both of those cases, your effort during the negotiation phase to bargain for additional insured status will be all for naught, and you will not know it until you need the coverage and it is too late to address the problems.