As there are already tons of learning opportunities regarding Additional Insured status, this post will instead be a general reference – it already assumes you’re well versed in the world of Additional Insureds. The following notes are especially relevant to construction industry clients as these are the primary drivers of complex AI requests, in my experience.
Since this is a reference it will be updated periodically. I will initially start with the oft-used GL AI forms, found especially in the construction world, and then proceed to review other options and how different lines handle AI. Please excuse any inelegant formatting and such as I’m still debating on how best to organize.
General Liability:
- CG 20 10 11 85 – the “OG”, first created after the CGL overhaul in 1985.
- No limitation for Ongoing vs. Completed Ops
- Has historically been litigated to provide *sole* coverage for the AI (i.e., not limited to vicarious only)
- Technically out of use for ages but many, many carriers still offer it as market demand (via contracts) is high
- Still contains “[work] for that additional insured” limitation (see later) which can cause havoc with improper blanket wording
- CG 20 10 10 01 – Very similar to CG 20 10 11 85, except limited to ONGOING operations only.
- CG 20 37 10 01 – Very similar to CG 20 10 11 85, except limited to COMPLETED operations only.
The pair of CG 20 10 10 01 and CG 20 37 10 01 are functionally equivalent to the CG 20 10 11 85.
- CG 20 10 07 04 & CG 20 37 07 04 – Uses the “10 01” language but adds the restriction that liability which triggers coverage for the AI must arise “in whole or in part” by your actions or those acting on your behalf. I.e., removes “sole negligence” coverage for the AI.
- CG 20 10 04 13 & CG 20 37 04 13 – Uses the “07 04” language but adds the further restrictions that coverage is only provided to the AI if permissible by law and, if the AI status/coverage is dictated by contract, only to the extent required by the contract. E.g., if your contract requires limits of $500,000 GL (to which the AI is added), but you actually carry $1M limits, the endorsement limits payment to the AI to the contractually obligated amount ($500K).
- CG 20 10 12 19 & CG 20 37 12 19 – Functionally equivalent to the “04 13” versions but an administrative clarification was made – the “Limits of Insurance” verbiage was amended to remove the reference to the limits “shown on the Declarations”; rather the endorsement merely states the AI coverage will not increase available limits (rather than “will not increase the limits [shown on the declarations]”). This is in recognition of the fact that limits can be amended by endorsement and thus the “hard” reference to the declarations may be in error. I am not aware of a lawsuit that prompted this but if you know of one please send my way!
The above endorsements are strictly “Scheduled” AI forms – meaning their technical use is limited to name a single, explicit entity to whom AI coverage is given. However it’s very common to have endorsements with manuscripted “blanket” language – for example the schedule might read “All parties with whom you have an executed written agreement to provide Additional Insured Coverage” or similar.
This is usually not a problem – and often the preferred way of writing these endorsements since many contractual parties want to see specific endorsement numbers – but it definitely can be. This is because each of these endorsements, even the “11 85”, has a limitation that states, essentially, coverage is limited to operations performed for the listed Additional Insured. Here is the relevant text from the CG 20 10 12 19:
[…] in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above.
Note the explicit reference to both the Additional Insured and, in the CG 20 10 12 19, a specific location. This means that if your blanket language is insufficient, you could be leaving out a LOT of coverage for a LOT of third parties.
This is primarily a concern when the blanket language references only parties with whom you have a direct contractual relationship (privity). For example, in Westfield Insurance v. FCL Builders, Inc. the insured’s “Blanket” wording read:
“A. Section II — Who Is an Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such a person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.”
Reading that via the “four corners” analysis (as insurance courts do), the only entities to whom that “blanket” AI language applies are those with whom you have a direct contractual agreement to add that party as an AI. Basically, only the other party signing the contract will get the AI status.
But contracts regularly require other parties to be named as AI – and an insured signing such contract typically doesn’t have a direct contractual relationship with these parties. This happens all the time in the construction world – a first tier sub will almost always require their lower tier subs to add the project owner, project financiers, other subs further up tier. Heck, most construction contracts “kitchen sink” the whole thing by saying, “Hey, lower tier sub, you need to add anyone I, the upper tier sub, have agreed to add via all my other agreements.”
But this isn’t just in the construction world. Tons of contracts require you to name third parties. Think contracting with a landlord of a multi-use property – they may require you to indemnify other tenants, or their mortgage holder, or a specific vendor, or etc.
Because of this, the above blanket AI wording was found limiting – it does not apply to those third parties whom you were obligated to add as AI but with whom you do not have a direct contract (contractual privity). Yowza.
Because of this you must, must, must negotiate the proper “blanket” wording for AI forms. Simply securing the 10/01 or 11/85 editions is not enough – you must ensure it responds properly to all those entities to whom your insured is obligating themselves. As the “blanket” wording is often custom (and held over from when it was written on a typewriter), it’s imperative for the broker and legal counsel to determine propriety.
- CG 20 33, CG 20 38, CG 20 39, CG 20 40 – This privity concern is also a huge issue when ISO attempted to provide a standard “automatic” AI status. Firstly, ISO released such endorsement only for Ongoing Operations, then while they did finally release one for Completed Ops as well both contained the privity issue, necessitating another set of endorsements (automatic status for other parties). When this post is updated in the future we will review those endorsements (CG 20 33, CG 20 38, CG 20 39, CG 20 40). The “TL;DR” of that is that the combination of those will imitate CG 20 10/20 37 12 19, but if you need “old” coverage you’re stuck with the above scheduled forms until the cows come home.