As a COI or compliance administrator, you have a lot on your plate. The entire COI review and collection process that you go through for every 3rd party vendor or subcontractor can be simply overwhelming. And on top of that, the terms and language used in the world of insurance can be downright confusing and difficult to keep all of the terms straight.
From “Additional Insured” to “Waiver of Subrogation” to Primary & “Non Contributory”, we’ll review these terms and explain what each means in plain and simple language, helping you do your job faster and with more accuracy and confidence. Let’s dive in:Additional Insured:
We’ve tackled this one in a previous blog, but let’s dig into this a little more. In plain and simple language, the term “Additional Insured” refers to a special addition to a policy to include someone not originally listed on the policy. To explain further, a recent IRMI article shared the definition as, “A person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured. A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of property leased by the named insured).”
If your organization enters into an agreement with an entity, then it’s very important to ensure that your organization is listed as an additional insured. Being listed as an additional insured is how you know you have the coverage in place that protects your company when a vendor causes a claim.
Gaining additional insured status is only possible by adding an “Additional Insured Endorsement” on the policy. There is no other way to get this status and if you aren’t granted it by listing it directly on the policy and via the endorsement (not just on the COI), then your organization or a specific individual in which you are trying to provide coverage for is not an additional insured and will not be covered as such.
Waiver of Subrogation:
The “Waiver of Subrogation” is essentially an extension by an insurance company saying that the insurance company will not pursue their right to recover monies they’ve paid out for the additional insured in which your organization has agreements in place.
What are the implications of the waiver of subrogation? If you are listed as an additional insured without the waiver of subrogation, the insurance company could go after you to recover monies paid out. The waiver gives you an extra extension to say insurance will be hands off and will not go after financial recovery for a claim paid out. Therefore, it’s imperative that you understand the waiver of subrogation and ensure it is listed on the endorsements that you are collecting and reviewing.
According to an IRMI article, “A waiver of subrogation may allow you to avoid becoming engaged in the complexities of lawsuits and insurance claims, while managing the risk and associated expenses.”
Primary & Noncontributory:
Primary and noncontributory refers to policy wording explained in a recent article as, “Commonly used in contract insurance requirements to stipulate the order in which multiple policies triggered by the same loss are to respond. For example, a contractor may be required to provide liability insurance that is primary and noncontributory. This means that the contractor’s policy must pay before other applicable policies (primary) and without seeking contribution from other policies that also claim to be primary (noncontributory).”
In simple language, these two words are along the lines of “Waiver of Subrogation” in that if a policy exists that’s tied to the entity that is named as additional insured, an insurance company might ask that other insurance company to contribute to the loss (in this scenario, your organization’s insurance company) if a claim is filed. As a COI compliance staff member, it’s important to ensure that additional insured status includes both “primary and noncontributory” language so that your organization is financially protected against a loss.
Stay in the Know on COIs & Endorsements
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