Contractual Agreements and Their Impact on Additional Insured Endorsements
If you’re a project owner, developer, or general contractor, you’re well versed in working with subcontractors. But are you as confident in navigating the challenges you could face when transferring your liability risks to others?
In Lockton Companies’ three-page white paper “Constructing A Strong Contract,++” two important and revealing court cases are discussed. These cases highlight a major issue many in the construction industry face: contractual agreements that fall flat and don’t protect additional insured like they should.
Here are three highlights to consider next time you transfer your liability risks to others:
1. Coordinate Contracts With Endorsements
It is critical to coordinate your contractual agreement with the additional insured endorsements. This not only ensures you aren’t liable if an accident happens, but also ensures you have validated protection when you need it.
2. Specify Blanket vs Scheduled Endorsements
According to IRMI, the premier authority and educator for risk management, insurance, and legal professionals, blanket additional insured endorsements (or automatic additional insured endorsements) grant insured status to “all persons and organizations meeting a particular qualifying threshold (such as their requirement in a contract that they be made additional insureds), without having to be individually listed.”
A scheduled additional insured endorsement (such as CG 20 10) requires that the person or organization being given insured status be identified individually in a list, or “schedule,” in the endorsement itself.
3. Get It In Writing
“When a general contractor fails to have a direct, written agreement with their second-tier contractors, the additional insured coverage may not apply.”
You’re confident in your subcontractors. So take the first step in becoming just as confident about your insurance.