What does "additional insured" actually mean on my policy?

What does "additional insured" actually mean on my policy?

It means your liability policy will defend and pay for someone else, usually the general contractor or property owner, when they're sued over something your work caused. It doesn't give them a policy of their own, and it doesn't add any limits. They're sharing yours.

What does the additional insured endorsement actually do?

It extends your liability policy to cover the general contractor, but only for harm your work caused.

When a general contractor requires you to name them as an additional insured, they're asking you to extend your policy to them. The standard endorsement adds them as an insured for bodily injury, property damage or personal and advertising injury caused in whole or in part by your acts or omissions, or by those acting on your behalf, while you're doing work for them.

That clause is the boundary. You're covering them for your fault, not theirs. If the GC is sued over something entirely of their own doing, your policy was never reaching it.

Does the additional insured get their own limits?

No. They share your limits. They don't add to them.

This is the part almost nobody explains, and it's the one with real financial consequences. The endorsement states plainly that it doesn't increase the limits shown on your policy. An additional insured isn't bringing their own coverage. They're standing inside yours.

So a subcontractor with a $1,000,000 per-occurrence limit who has named four general contractors as additional insureds across four jobs still has $1,000,000. A serious claim on one job can use up the limit that was supposed to protect you on the other three, and your own defense comes out of the same pot.

If you work for several GCs at once and carry a minimum limit, that's worth thinking about carefully. It's usually the strongest argument for a commercial umbrella.

Does it still cover the GC after the job is finished?

Not unless you have a second endorsement. Ongoing work and finished work are covered by two different forms.

The common endorsement, CG 20 10, covers your work while it's ongoing. It specifically excludes injury or damage that happens after:

• the work on the project has been completed; or

• the part of the work that caused the harm has been put to its intended use by someone other than another contractor on the same project.

So once you finish and the owner moves in, that endorsement has stopped working for the GC.

Completed operations requires a separate endorsement, CG 20 37. Most well-written subcontracts demand both. Plenty of subs carry only the first and never find out, because the gap only shows up when a claim arrives after the job is done, which is when most construction defect claims arrive.

If your contract requires additional insured status for completed operations, check that you actually have the second endorsement. It's the most common gap we see.

What does "no broader than the contract requires" mean?

It means your subcontract, not your policy, sets how much coverage the additional insured gets.

The 2013 edition of the standard endorsements added two limits, and both cut against what most subcontractors expect:

• Coverage is no broader than what the contract requires you to provide. If your subcontract requires something narrow, the endorsement gives something narrow, even if your policy would otherwise have been more generous.

• The limit is the lower of what the contract requires or your own limits. If the contract requires $1,000,000 and you carry $2,000,000, the additional insured gets $1,000,000.

Both also apply "only to the extent permitted by law," which matters because states differ on how far one party can shift liability for its own negligence onto another by contract.

The practical result: the subcontract is now doing half the underwriting. What it says you must provide decides what the additional insured actually gets.

Should my additional insured coverage be scheduled or blanket?

If you work for more than two or three general contractors, blanket is usually the better choice.

Scheduled names each additional insured individually. It's precise, and it means a call to your agent for every new GC. That's fine until you sign a contract on a Friday and start on Monday.

Blanket extends additional insured status automatically to anyone you're required by written contract to cover. It only works where there's a written contract signed before the loss, so a handshake job gets nothing.

Is a certificate of insurance proof of additional insured coverage?

No. The certificate is a summary. The coverage lives in the endorsement.

A certificate of insurance showing "additional insured" in the description box is a summary produced by an agency. It's informational, it says so on its face, and it gives no coverage on its own.

A certificate can say additional insured status exists when the endorsement was never issued, sometimes through error, sometimes because the policy doesn't include blanket wording and nobody scheduled the GC.

• As a sub: don't assume the certificate your agent issued means the endorsement exists. Ask for a copy of the endorsement itself.

• As someone hiring subs: the same point in reverse. A certificate in the file proves somebody typed something.

What else does my subcontract probably ask for?

Usually three more things, and none of them is automatic.

• Primary and non-contributory: your policy pays first, and the GC's policy doesn't contribute. A separate endorsement.

• Waiver of subrogation: your insurer gives up the right to go after the GC after paying a claim. Also separate, and it has to be agreed before the loss.

• Specified limits, which, as above, now cap what the additional insured receives.

Each is an endorsement, each may carry premium, and each needs to be in place before you start work, not after you've been asked for a certificate.

What changes in North and South Carolina?

Both states limit how far a construction contract can make you pay for someone else's negligence, though neither statute overrides your insurance policy.

In North Carolina, G.S. 22B-1 voids a construction contract clause requiring you to indemnify someone for injury or damage caused by their own negligence, even in part. In South Carolina, S.C. Code § 32-2-10 voids indemnity only for damage caused by the other party's sole negligence. Both statutes say they don't affect insurance contracts.

That's why GCs ask for additional insured status as well as an indemnity clause: the endorsement can reach places the contract can't. But the endorsement's own wording still ties coverage to your fault, and how a court reads the two together depends on the facts. If you work on both sides of the state line, have your agent look at the insurance exhibit for each state.

What should I check before I sign the next subcontract?

• Read the insurance exhibit, not just the price. It's usually two pages and it decides what your policy has to do.

• Confirm you have both the ongoing and completed operations endorsements if the contract requires both.

• Confirm whether your policy carries blanket additional insured wording.

• Compare the required limits to what you carry. You can't give more than you have.

• Send the insurance exhibit to your agent before you sign. It takes ten minutes, and it's far cheaper than finding a gap at claim time.

H.B. Cantrell & Co. has been helping contractors across North and South Carolina for over 50 years, from our office on East 7th Street in Charlotte. We review subcontract insurance requirements as a matter of course, and we represent markets built for construction rather than adapted to it.

If you have a subcontract on your desk with an insurance exhibit you'd rather someone else read, call 704-954-9000. A person picks up.

Endorsement terms described from ISO forms CG 20 10 and CG 20 37 (04 13 edition). State law per N.C. G.S. § 22B-1 and S.C. Code § 32-2-10. Carrier forms vary, and some use proprietary wording that differs materially. This article is general information, not legal advice or advice about your specific policy.