Additional Insureds: Coverage, Contracts, Endorsements and Certificates
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Understand additional insured coverage and requirements, as well as the benefits and pitfalls.Many parties to commercial transactions enter into contracts which contain indemnification and duty to procure insurance clauses. Although these clauses often provide overlapping protections for negligence and breaches of the insured contract, they are distinct, and parties must understand their differences to obtain optimum risk allocation. A common way to address indemnity and duty to procure insurance obligations is through the use of additional insured designations under commercial general liability and other insurance policies. Securing and documenting the required coverages, however, is a process fraught with risks and misunderstandings if certain best practices are not followed. This topic will explore best practices to mitigate the risks. In addition, the material will address best practices for asserting additional insured claims once a loss arises. Finally, the topic will address several of the most common exclusions to coverage under CGL policies that affect named insureds and additional insureds alike.
AuthorsBrandon G. Hummel, Hummel Law Group
Contractual Risk Allocation Issues on Commercial Projects
• An Overview of Common Risk Allocation Issues
• Contractual Indemnification Clauses
• Duty to Procure Insurance Clauses
• The Interplay Between Indemnification and Duty to Procure Insurance Clauses
• The Difference Between AI Coverage Under an Insured Contract and Coverage for the Named Insured's or Additional Insured's Own Negligence
• Impact of State Anti-Indemnity Statutes on Indemnification and Duty to Procure Insurance Issues
Sources of Additional Insured Coverage
• The CGL Policy: Basic Structure
• Types of AI Endorsements: Blanket vs. ISO vs. Manuscript
- Blanket CGL AI Endorsements
- Standard CGL AI Endorsements
- Nonstandard CGL AI Endorsements
Certificates of Insurance - Purposes and Limitations
• Certificates Do Not Create Coverage; the Insurance Policy Does
• The Requirements of the Underlying Contract Are Critical
Other Problematic Situations
• Separation of Insureds: Coverage for the Additional Insured Where the Named Insured Is Excluded
• Common CGL Exclusions Affecting Named Insureds and AIs:
- CGL Forms for Owners and GCs That Limit Coverage for Actions of Sub-Contractors
Best Practices for Asserting AI Claims
• Types of Losses and Potential for Coverage
- Injury Claims
- Breach of Contract
- Warranty Issues
• Notice: Who Is to Give Notice, of What, and When?
- Notice of Loss, Notice of Suit and Tender of Defense
- Notice to Producers and Issues of Apparent Agency
- How Late Is Too Late?
- Is Prejudice Required?
• Whether AI Is Entitled to a Defense
- How Many Corners?
- What Must an Insurer Consider in Evaluating a Tender of Defense?
- The Reservation of Rights Letter and Conflict Issues/Choice of Defense
- Conflict Waiver and Representation of Multiple Parties
• Whether AI Is Entitled to Indemnity