As one of the most expensive items that a contractor will encounter when working on a project, contractors must budget their insurance program accordingly. And it’s worth every penny to get the best coverage – if you are not careful, one uninsured claim can wipe out your entire company. This is why it’s crucial to ensure that you have the right coverage in all possible areas.
Additional insured endorsements will offer extra protection for injury claims, but the coverage is not as broad as it was 20 years ago. Here are the types of endorsements that are most commonly required in contracts today:
- CG 20 10 07 04 – This endorsement will grant additional insured coverage for ongoing operations to the additional insured (e.g., owners or general contractors) whenever its liability is caused in whole or in part by the named insured’s acts or omissions. The additional insured is specifically listed in a schedule on this endorsement. To be covered, there needs to be some causation, in whole or in part, out of the named insured’s acts or omissions. For example, if there is an accident at the construction worksite, this incident would have been caused by ongoing operations. However, if an electrician completed a job and made an error that caused a fire years later, it would not be covered under this endorsement.
- CG 20 37 07 04 – This endorsement provides the same coverage as the endorsement above, but in this case, it is for the additional insured’s imputed liability caused in whole or in part again by the named insured’s work. Coverage will only be provided after the work is completed – this means that it is work included within the “completed operations hazard.” For example, suppose an onsite fire occurs six years after a job is completed. In that case, the additional insured endorsement needs to be in place on the policy when the fire takes place, not on the policy that might have been in place at the time when work was performed. This is why it is important for insured contractors to make sure they continue their completed operations coverage after the job is completed and maintain it as long as the contract requires.
- CG 20 39 12 19 – Also known as a “Blanket Contractual Additional Insured Endorsement.” This endorsement provides coverage to the additional insured on the same basis as the CG 20 10. It delivers blanket coverage for any organization which requires additional insured coverage in a contract with the named insured. The additional insured does not need to be individually scheduled on the endorsement, making it ideal for big contractors or subcontractors who work on hundreds of jobs every year.
- CG 20 40 12 19 – This endorsement is similar to CG 20 39. It provides completed operations coverage for any other organization that the named insured is required to provide any additional insured status to but does not have a direct contract with that organization (e.g., architect or engineer).
Deciding which additional endorsements to add to your plan is a big decision. It must be considered carefully after reviewing the relevant contract. If you need assistance reviewing your contracts and discussing which options are the best for your business and contractual obligations, The Horton Group is here to help. Reach out to one of our consultants at (800) 383-8283 and schedule an appointment.
Contracts and Additional Insured Edorsements with Bill McVisks:
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.