What Is An Additional Insured Endorsement?
What Is An Additional Insured Endorsement? If you occupy, manage or own property, or you often hire subcontractors and contractors to complete some projects for you, then it is essential you are aware of Additional Insured Endorsements. In general, a typical Additional Insured Endorsement includes/adds your name as a party insured under the liability policy of the contractor.
Depending on the endorsement's specific wording, this provision can offer diverse protection against lawsuits and claims from individuals who may be subsequently injured or property that may have been damaged owing to the contractor's actions/work. Where the contractor, subcontractor or firm you have decided to work with for a project is identified to be in the wrong, it can be significantly costly for you. On the other hand, that firm may ask for you to add them as a typical additional insured on the particular policy which you own. With this, they receive coverage if your company is found to be at fault.
What is an additional insured endorsement? Mary is confused. According to her current and soon-to-expire contract, her liability coverage isn't required to be primary and non-contributory. What might this change mean?
What is an additional insured endorsement? This means a policy must pay before other policies and without seeking contribution from other policies that also claim to be primary.
Liability Insurance Is Primary
What is an additional insured endorsement? When your chosen contractor firm adds you their particular policy, this frees your business from any liability, while you enjoy the benefits courtesy of their liability insurance. Similarly, if you include your contractor or partner firm to the policy you own, then they also enjoy the same benefits including release from liability in the event your company is found to be at fault.
When you are working with another firm on a given project, it might serve both your interests to add each other as exclusive additional insureds. Although this particular form of insurance is relatively common especially among contractors, it can be extended to include a host of other individuals and industries. For instance, a standard Commercial Auto Insurance policy can also have a typical 'additional insured' endorsement. This is a relatively common occurrence where company automobiles go with several employees.
What is an additional insured endorsement? In such a situation, the additional insured endorsement on such a policy like commercial auto insurance, will cover any other individual who may ultimately drive the company automobiles without presenting a particular name. In reality, this form of 'additional insured status' can be extended to other types of insurance policies also. Nonetheless, some endorsement policies may mandate for specific names.
One crucial fact, however, that is crucial and which any policyholder needs to understand is that additional insured endorsement does not necessarily signify equal benefits. Multiple types of this provision provide different coverage levels. For instance, in the case where an additional insured endorsement falls under a standard Personal Auto Insurance Policy, the insurance usually treats all drivers in equal measure. However, several additional insured statuses under different liability policies may only be valid during the period the added parties are working for or with you. Others may consequently limit the overall amount of coverage the concerned parties receive.
What is an additional insured endorsement? Most of these policies cover only the basics of liability coverage protections mainly: legal defense not to mention various types of property damage or personal injury compensation. Adding this particular endorsement can come with at a cost. Although it may add to the overall premium costs, it costs lesser acquiring a new policy does.
How Do I Add An Additional Insured Endorsement To My Policy?
The process of including an additional insured endorsement in your policy is quite easy. First, you need to identify the party you want to add under this endorsement. This can either be a particular organization or individual. What's more, you may also need the specific addresses of the parties you want to add. The likelihood of you providing any personally identifying details beyond that is minimal.
What is an additional insured endorsement? They appear as separate documents under your given policy. If a party intends to or you have asked to be added as an additional insured, make sure that you get your copy of the document. Unlike a Certificate of Insurance, it is not possible for you to request proof of an additional insured endorsement, especially from another person's insurance company. However, some insurance firms may offer you an additional insured document over and above a Certificate of Insurance.
Court Cases On Additional Insured Issues
McIntosh et al., Plaintiffs, Appellants v. Scottsdale Insurance Co., Defendant, Appellee.
A man was injured when he fell twenty feet over a low retaining wall in a municipal convention center during an annual festival, which was conducted by a nonprofit corporation (hereinafter "the festival") pursuant to a city ordinance. He sued the city, alleging that his injuries were caused by "the city's failure to warn of a dangerous condition."
The city's general liability insurer provided defense when the festival's insurer denied liability. Before trial, the city admitted fault and, in return, the injured man agreed "not to execute against (the city's) assets and to release (its insurer) from any claims growing out of the accident." After trial on damages only, judgment was entered against the city.
The plaintiff then brought an action against the festival's insurer, alleging that it owed coverage to the city for the tort judgment. A federal district court concluded that an additional insured endorsement in the subject policy did not cover the city for its own negligence and that the governing ordinance did not require the festival to obtain coverage for the city's own negligence. Appeal followed granting of the festival insurer's motion for summary judgment and denial of the plaintiff's cross motion, including request for attorneys' fees.
The appeal court noted that an additional insured endorsement in the subject policy provided that: "The persons insured provision is amended to include as an insured the person or organization named below but only with respect to liability arising out of operations performed for such insured by or on behalf of the named insured."
The festival (the nonprofit corporation) was the named insured; the city was identified as an additional insured. The district court concluded that the endorsement extended coverage to the city only to the extent that it would be held vicariously liable for negligence on the part of the festival. As a corollary, the subject coverage would not cover negligence on the part of the city.
The appeal court disagreed. It concluded that the endorsement covered the city for the tort judgment. It found that the phrase "but only with respect to liability arising out of (the named insured's) operations" could be read to provide coverage for the additional insured in the circumstances. It said that a reasonable person would believe that the plaintiff's injuries and the city's liability stemmed from the festival's operations.
The judgment of the district court was reversed and remanded with an order to enter summary judgment for payment of the damage award to the plaintiff and to conduct a hearing on the request for attorneys' fees.
(McINTOSH ET AL., Plaintiffs, Appellants v. SCOTTSDALE INS. CO., Defendant, Appellee. United States Court of Appeals, Tenth Circuit. No. 92-3164. April 22, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4293.)
The Burlington Insurance Company, Appellant v. NYC Transit Authority, et al.
Thomas P. Kenny, an employee of the New York City Transit Authority (NYCTA) was seriously injured when he fell off an elevated platform in his attempt to avoid an explosion. The explosion was caused by a Breaking Solutions, Inc. (BSI) machine touching a live electrical cable that was buried at the site.
NYCTA, MTA and the City of New York (City) were additional insureds under BSI CGL policy issued by Burlington Insurance Company (Burlington) so when Kenny and his wife sued BSI, MTA, NYCTA, and City for the injuries, defense and indemnity was requested from Burlington from all parties.
Burlington took on the case subject to a reservation of rights. When it was revealed that the BSI was not and could not have been aware of the buried electrically energized cables BSI was found not negligent by the courts. Burlington then withdrew its coverage for MTA and NYCTA because BSI had not been negligent. Burlington did settle on behalf of the City for $950,000.
Burlington commenced an action with the courts for a summary judgment that it does not provide any coverage for NYCTA and MTA. Burlington then added to that action its right to subrogate against the City so as collect the $950,000 from the City because it was also not covered under the BSI policy. The Supreme Court awarded summary judgment to Burlington and NYCTA, MTA and City appealed.
The Appellate Division reversed the decision. Burlington appealed The New York Court of Appeals agreed to hear the appeal.
The wording of the additional insured endorsement stated that an entity is "an additional insured only with respect to liability bodily injury caused, in whole or in part, by [BSI's] action."
Burlington argued that because BSI did not cause the injury, coverage did not extend to the additional insureds. The defendants argued that because BSI a part of the loss and that if not for BSI actions, the accident would not have occurred there as a "but for" causation so that coverage would then extend to the additional insured.
The New York Court of Appeals rejected the "but for" argument and agreed with Burlington that because BSI was not negligent there was no coverage available for any of the additional insureds.
The Burlington Insurance Company, Appellant v. NYC Transit Authority, et al., Respondents, New York Supreme Court, Appellate Division. 2017 NY Slip Op 04384
Brian Fay Construction, Inc., vs. Morstan General Agency, Inc.
Brian Fay Construction, Inc. (BFC) subcontracted with J.P. Spano and Company (Spano) to perform some work on BFC's construction site. The parties agreed that BFC would defend, indemnify, and hold Spano harmless from all claims that arose from BFC's performing certain subcontract work.
BFC asserted that it contacted its insurance agency, DFW Associates, Inc. (DFW) after it entered into its agreement with Spano to have it add Spano to BFC's general liability policy as an additional insured. DFW issued an "ACORD Certificate of Liability Insurance" naming BFC as the insured and Spano as an additional insured under Fay's general liability policy with Burlington Insurance Company (Burlington). The certificate also named Spano as an additional insured under BFC's workers compensation policy with Realm Insurance Company (Realm).
A BFC employee was injured on the job and sued Spano for damages. Spano brought a third-party action against BFC and BFC filed a claim with Burlington. Burlington denied coverage. It asserted that BFC's policy excluded coverage for losses that arose out of bodily injury to the insured's employees, that an endorsement to the policy provided that there was no liability coverage for losses that involved the insured's employees, and that "there was no evidence (that) Spano was an additional insured."
After Burlington stated its reasons to deny coverage, BFC filed an action against DFW and Morstan General Agency, Inc. (Morstan), another insurance broker. The action claimed that they "failed to properly name" Spano as an additional insured on the Burlington policy. The lower court found that DFW was obligated to defend and indemnify BFC in the underlying personal injury action that BFC's employee filed. DFW appealed.
On appeal, the Supreme Court, Appellate Division, Second Department, New York, noted that insurance agents generally have a "duty to obtain requested coverage for their clients within a reasonable time or to inform the client of the inability to do so." The court noted, however: "While Burlington's letter indicated that 'there was no evidence Spano is an additional insured,' the letter, by itself, did not establish that Spano was in fact not an additional insured under the liability policy, or that the claim was rejected on that basis, or that the claim would have been rejected, based on the employee liability exclusion, regardless of whether Spano had been named as an additional insured.
Indeed, the letter may be interpreted as merely seeking additional information from the plaintiff." The court concluded that BFC had not met its initial burden of producing enough facts to entitle it to a decision in its favor as a matter of law with respect to DFW. The lower court's judgment was reversed.
Brian Fay Construction, Inc., vs. Morstan General Agency, Inc. Supreme Court, Appellate Division, Second Department, New York. December 20, 2011. 90 Atlantic Decisions 3rd 796
The Bottom Line On Additional Insureds
An Additional Insured Endorsement can be an excellent way to establish a healthy relationship with either a business partner or a client. Ensuring that everybody is well covered will leave you to concentrate on the projects at hand rather than the impending risks which accompany the project.
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Get useful tips and information about how much commercial insurance costs, small business risks and exposures, how insurance regulations effect your businesses' and detailed descriptions of coverages and exclusions and more. Most small businesses need to buy the following four types of insurance at a minimum to cover their operations from every day risks:
Property Insurance: This policy covers a business if the property used in the business is damaged or stolen as the result of common perils like fire or theft. Commercial property insurance covers the buildings, structures and also business personal property - which includes furniture, inventory, raw materials, machinery, computers and other items.
Liability Insurance: Any company can be sued. Slip-and fall lawsuits are very common and be costly. Customers can claim you injured them or damaged their property - and lawsuits are very expensive. Commercial liability insurance pays damages and can include attorney's fees and other legal expenses. It also ca pay for the medical bills of injured third parties
Commercial Auto Insurance: For vehicles owned by the business. Commercial auto insurance pays bodily injury or property damage costs for which the business is found liable - up the the policy limits for liability and property damage.
Workers Compensation Insurance: In almost every state employers must provide workers comp when there are W2 employees. Workers compensation pays for the medical care of employees and can replace a portion of lost wages - regardless of who was at fault for the injuries.