Additional insured issues

19 March 2008

The insurance industry, not unlike the rest of the world, is constantly evolving. It changes with the times to meet the needs of an ever changing business culture. New types of insurance are introduced to meet consumer needs and lawmakers and legal professionals continue to craft and re-craft insurance policies and their corresponding endorsements. To a business owner, the task of understanding the anatomy of an insurance policy can be a Herculean undertaking. The punctuation of choice seems to be the ever popular comma splice while run on sentences do exactly what they claim-they run on. And on. And on.

So rather than trying to digest the policy and its endorsements in its entirety, we will chew on bits and pieces of it, making the consumption of the topic this month and next, additional insured issues, seem less like a forced feeding.

Risk transfer in the field of crane and rigging is paramount when it comes to survival. Industry professionals have long been educated that indemnity agreements, contracts and work tickets are effective means by which to transfer risk from one party to another. But the real big gun, the WMD of risk transfer so to speak, is the infamous additional insured endorsement.

Additional insured (AI) coverage has been a topic of discussion around insurance company water coolers for years. Crane and rigging companies have had to pay huge losses on their insurance polices by unwillingly (and sadly, sometimes willingly) giving broad AI coverage to contractors for whom they were working. Sometimes it's been unavoidable, like when getting the job contract required it, and sometimes it's been out of ignorance.

Nevertheless, naming the contractor for whom you are working as an AI forces your policy coverage into responding to incidents that were absolutely not your fault, but because the loss “arose out of”your work on the jobsite.

Conversely, many crane companies have seen the benefits of having the coveted additional insured status, especially when it comes to bare rented equipment. Damage that occurs while the equipment is rented to another party under the terms of a bare rental is picked up by the lessee. Furthermore, if an on-the-job injury sparks a lawsuit in which the lessor is named, the insurance coverage provided by the lessee is triggered to provide a defense.

Interpreta conseque the cinter provide protectio addition Thesuproviding to its ge him with even if the subcontractor had absolutely no involvement in the incident. The courts later found that the subcontractor's mere presence was sufficient to have the liability arise out of the subcontractors work.

Not surprisingly, the smaller companies that were being required to provide this type of coverage were none too happy. As a matter of fact, a large portion of the insurance companies insuring these subcontractors are now refusing to give 11 85 coverage because the liabilities are far too broad. And thankfully, evolving limitations on additional insured coverages have been making it increasingly more difficult for general contractors to saddle all of their burdens onto their subs. Today, endorsements such as the CG 20 10 01 01 and the CG 20 10 07 04 are used much more often and offer exclusions for completed operations and attempt to limit coverage for the additional insured's sole negligence.

So where does this leave us? Well, while progress has been made in the last 20 years and bidding a job no longer means giving away the farm, the fact still remains that subs are required to provide insurance to the bigger, more powerful generals. They realize that being named an additional insured provides them with direct access to a subcontractors insurance policy, can help thwart subrogation efforts, and allows for risk transfer separate from an indemnity agreement. act

”Crane and rigging companies have had to pay huge losses on their insurance polices by unwillingly (and sadly, sometimes willingly) giving broad AI coverage to contractors for whom they were working.


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