The topic of additional insured status is a difficult one at best. Many misconceptions result when adding contracting parties to one an-other’s insurance policies as additional insureds. There is also the tug-of-war between insurers and indemnitors that want to limit the scope of additional insured coverage under their policies and the in-demnitees who want to maximize coverage under the policies of the indemnitors. Added to this, the interaction of additional insured sta-tus with indemnity clauses, insurance requirements, and other con-tract provisions is unique and complex. This session will examine the reasons for requiring, methods of achieving, and problems associat-ed with additional insurassociat-ed status under various policies.
Additional Insured
Endorsements
Notes
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Additional Insured
Endorsements
#IRMI2016WHY MUST
THEY
TORTURE ME?
How One Little Piece of Paper Changed an Industry
#IRMI2016
E&O
The ultimate “additional
insured” endorsement
3
What Is(n’t) A Certificate Of Insurance?
• Informational snapshot only
• Cannot modify a policy
#IRMI2016
Three Types Of Certificate Desires
• I have a dream
• Here’s what I’ll settle for
• Deal-breaker
5
Four Types Of Certificate Requests
Uninsurable
“Any”• Acts, errors, omissions • Any and all liabilities
• Claims, costs, expenses, liabilities, penalties, fines “Primary and Non-contributory”
• What does non-contributory mean? • Non-CGL policies
#IRMI2016
Four Types Of Certificate Requests
Illegal
Non-existent coverage • Withdrawn endorsements • Transfer of sole negligence Certificate modifications
• Striking through / amending language / disclaimers • ACORD copyright violation
• Statute, regulation or DOI directive violation
7
Four Types Of Certificate Requests
Inappropriate
• Cancellation notice
• No longer provided
• “Endeavor to” was a pipe dream
• Non-ACORD Certificates
• Usually require company approval
#IRMI2016
Four Types Of Certificate Requests
Inappropriate
• Comprehensive General Liability
• Comprehensive Automobile Liability
• Agent attestation (“in the opinion of the agent, the policy
contains the required insurance coverages/indemnifications
required by the contract with the insured”)
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Four Types Of Certificate Requests
Impractical
• Unavailable or expensive
• Completed operations, EIFS, pollution, subsidence, mold, etc. • No time to search market before certificate is due
#IRMI2016
Weird Requests
• “Ongoing operations”
• “XYZ Corporation and its officers, directors, partners,
members, and employees”
• “coverage to continue for (5) (10) years”
• “x”, “c” and “u” exclusions removed
• Blanket contractual liability
• Broad form property damage
11
Other Issues
• Certificate limit v. policy limit
• Impaired aggregates
• Deductibles and SIRs
• Defense within limits
• Known loss or damage
• Umbrella and excess policies
• Copyright issues
• Carrier agreements
“Your authority extends to issuance of standard, unaltered Certificates of Insurance (ACORD 24 or 25)”
#IRMI2016
Use The Proper Form
• ACORD Certificates
• 20 Certificate of Aviation Liability Insurance • 21 Certificate of Aircraft Insurance
• 22 Intermodal Interchange Certificate of Insurance • 23 Vehicle or Equipment Certificate of Insurance • 24 Certificate of Property Insurance
• 25 Certificate of Liability Insurance • 27 Evidence of Property Insurance
• 28 Evidence of Commercial Property Insurance • 29 Evidence of Flood Insurance
• 30 Certificate of Garage Insurance
• 31 Certificate of Marine/Energy Insurance
13
What You Should (and Should Not) Do
• DO provide a disclaimer to the insured and certificateholder• DO NOT exceed your legal or contractual authority
• DO work with the insured’s attorney or minimize contract review • DO NOT modify an ACORD certificate
• DO proof-read all certificates and perform periodic audits • DO establish a procedure for handling certificates
• DO always send the entire certificate (both pages)
• DO be judicious with the “big white box” – the FIG indicates you should put “any exclusion endorsement or special policy condition”
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What You Should (and Should Not) Do
• DO send copies of certificates to all insurers/MGAs/wholesalers
• DO use the correct form
• DO NOT use proprietary or non-ACORD forms without company
approval
• DO NOT certify coverages that don’t exist
• DO NOT indicate limits on a certificate that satisfy the request
when actual policy limits are higher
• DO NOT sign any certification or attestation without
management approval
#IRMI2016
Additional
Insured
Changes
162013 Changes
• 24 revised forms• Many changes are due to state “anti-indemnity” statutes • Coverage for AI is “only to the extent provided by law”
• Coverage for the AI cannot be more broad than that provided to the Named Insured
• New forms
• CG 20 01 – Primary and Non-Contributory – Other Insurance Endorsement
• Requires AI to be an NI on other available insurance
• Written contract must state that our insured’s policy be primary and not seek contribution from other insurance of the AI
• CG 20 38 – Additional Insured – Owners, Lessees or Contractors – Automatic Status for Other Parties When Required in Written Construction Contract Agreement
#IRMI2016
2013 Changes
• Basic attempt to tie (and therefore limit) the coverage provided
to an Additional Insured to the underlying contract provisions
• New wording:
• “However:
1. The insurance afforded to such additional insured only applies to the extent permitted by law; and
2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.”
18
CG 20 38 © Insurance Services Office, Inc., 2012
2013 Changes
• 45 states have anti-indemnification statutes that restrict, modify,
or invalidate indemnification agreements in construction and
other contracts
• These statutes frequently prohibit the transfer of an indemnitee’s
sole (or concurrent) negligence through an indemnification
agreement
• ISO may be attempting to “genericize” the endorsement to
conform to the various state laws without the need to create
state-specific endorsements
• The ultimate impact of this change will remain unknown until ISO
issues clarification or there are judicial decisions
#IRMI2016
2013 Changes
“However:
1.The insurance afforded to such additional insured only applies to the extent permitted by law; and
2.If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or
agreement to provide for such additional insured.”
• This change could result in significant disagreements between the contracting parties
• Requires careful review of underlying contracts
20
CG 20 38 © Insurance Services Office, Inc., 2012
2013 Changes
• “If coverage provided to the additional insured is required by a
contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance:
1. Required by the contract or agreement; or
2. Available under the applicable Limits of Insurance shown in the Declarations;
#IRMI2016
Other Issues – Contractual Liability
That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
• CG 21 39 Contractual Liability Limitation Endorsement
• Eliminates this paragraph completely
• CG 24 26 Amendment of Insured Contract Definition
• That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization, provided the "bodily injury" or "property damage" is caused, in whole or in part, by you or by those acting on your behalf. However, such part of a contract or agreement shall only be considered an "insured contract" to the extent your
assumption of the tort liability is permitted by law. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
22
CG 24 26 © Insurance Services Office, Inc., 2012
Blanket Additional Insured Endorsements
• The use of blanket AI endorsements restricts the ability to
provide notice of cancellation. When blanket endorsements
are used, the insurer does not have a list of additional
insureds or addresses. They are not aware of additional
insureds' identities until a claim is made. Obviously insurers
can't provide notice of cancellation to unidentified parties.
#IRMI2016
Blanket Additional Insured Endorsements
• New CG 20 38 (replaces CG 20 33)• “Any other person or organization you are required to add as an
additional insured under the contractor agreement described in Paragraph 1. above.
• Extends AI status to an upstream party that is NOT a party to the underlying contract, where required
• Prior version only extended to parties who shared a contractual relationship
• Clarifies that other parties are covered when the NI is obligated in a written contract to name them – even when they are not in contractual privity with the NI
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CG 20 38 © Insurance Services Office, Inc., 2012
Resources
• Statutes and Regulation
• www.iiaba.net/VU/NonMember/WilsonCertLawsRegs.htm
• Court Cases
Notes
This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex.
