Another Additional Insured Coverage Gap Uncovered
Posted by Cary White on Mon, Jan 24, 2011 @ 02:07 PM
Insurance certificate management is more than a quick review of a certicate or checking a box. Whether we like it or not, it is essential that a knowledgeable person read every certificate and attachment carefully to be certain that the required insurance coverage is being provided. This is especially true of additional insured endorsement you receive with your insurance certificates.
Most insurance and legal professionals recommend that your written construction agreement clearly requires an additional insured endorsement (AI) in the name of the project owner. Many also recommend that such AI requirement be extended to the architect, construction manager and other parties. If the additional insured endorsement is the ISO CG 20 33 blanket AI endorsement or equivalent, it is important to note that the endorsement says, ". . .Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations when you and such 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 . . . " The International Risk Management Institue (IRMI) reports that one trial court is interpreting this clause to mean that only the party with which the insured is directly contracting is granted insured status. If this opinion were to be widely held, it would result in an enormous unintended coverage gap for contracts that require additional insured status for parties not directly contracting with the insured. The Big "I" national Technical Affairs Committee is pursuing this issue with ISO now. Contact IRMI or the Big "I" for additional information on this problem, the court case and efforts to resolve it.
In the meantime, it is essential to remember that any efforts with ISO to correct the problem will not affect proprietary blanket additional insured endorsement forms currently in use by many insurers and the ISO forms in use now.