what additional insured

What Is An Additional Insured?

An additional insured (AI) is a person or organization who is insured under the insurance policy of another party, at the request of that other party (the “named insured”).

However, to be added as an AI, you may need a direct contractual relationship with the named insured. 

As such, it’s important to be aware of the differences in additional insured endorsements that can affect your coverage.

What Is An Additional Insured?

As mentioned above, an additional insured is a party that is insured under the insurance policy of another party. 

AI status is common in liability insurance1 however, it does not exist in a vacuum.

AI status is often required by written contract and accompanied by an indemnity agreement (aka a “hold harmless”) between the named insured, the indemnitor, and the to be insured party, the indemnitee.

And whether you are party to the contract may affect your AI status.

Your specific situation and the contractual agreements between you and other parties to the agreement will ultimately determine which AI endorsement is appropriate and whether you have coverage.

Am I Covered As An Additional Insured?

Whether you are covered by the insurance policy of another party depends on the written contract language and the policy endorsements of the named insured:

  • Written Contract: You may be an additional insured if you have a written contract in place with the named insured and the language in the contract requires certain coverage. 
  • Endorsements: An insurance endorsement changes coverage, such as by adding exclusions or broadening coverage. The type of AI endorsement being used by the named insured2 matters and you may or may not have coverage depending on endorsements. Additional insured endorsements affect coverage depending on your contracts, ongoing operations and completed operations.

AI Endorsement Examples

The following are types of commercial general liability AI endorsements that you should be aware of because each of them affects additional insured status differently.

  1. Form CG 20 33 – “Owners, Lessees or Contractors – Automatic Status When Required In Construction Agreement With You”: The CG 20 33 form is a common form of “blanket additional insured” endorsement. This endorsement includes 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.”
  2. Form CG 20 10 – “Owners, Lessee or Contractors – Scheduled Person Or Organization”: This endorsement provides AI status for scheduled persons or organizations at scheduled locations in the performance of ongoing operations for those additional insureds. It does not include completed operations. 
  3. Form CG 20 26 – “Designated Person Or Organization”: This endorsement provides AI status for scheduled persons or organizations in the performance of ongoing operations or in connection with owned or rented premises.
  4. Form CG 20 38 – “Owners, Lessees Or Contractors – Automatic Status For Other Parties When Required In Written Construction Agreement”: This endorsement another form of “blanket additional insured” endorsement. Like #1 above, it requires a written contract, but it is broader because it provides coverage not only for the parties to the written contract but also “any other person or organization you are required to add as an additional insured under the contract or agreement.” It has certain exclusions and does not include completed operations. 
  5. Form CG 20 37 – “Owners, Lessees Or Contractors – Completed Operations”: This endorsement provides AI status for persons or organizations at designated locations that are scheduled on the endorsement and included in the products-completed operations hazard. 

Regarding #1 above, form CG 20 33, this is a commonly used “blanket AI” form… 

The term “blanket additional insured” sounds like it means broad coverage, however, this is not the case. A closer reading of the CG 20 33 “blanket AI” endorsement indicates that it requires the parties to have a written contract in place. 

As such, you may need the broader CG 20 38 which includes AI status for other persons or parties required by written contract. 

Solar Construction AI

AI status is common in commercial solar development projects and AI status may be found in many situations.

The situations below list the party receiving AI status in bold and the named insured providing AI status (in parentheses):

  • General contractor (from a sub-contractor)
  • Sub-contractor (from a sub-subcontractor)
  • Building owner (from the general contractor, subcontractors and sub-subcontractors)
  • Client (from the general contractor, subcontractors and any sub-subcontractors)
  • Lender (from the mortgagor or borrower)
  • Manufacturer (from a vendor or distributor)

In some cases, all of the above may be requested to satisfy additional insured requests from various parties.

What is additional insured

Solar Developer Construction Example

Solar developers may sell their projects or develop and operate them… In the latter case, a developer may hire a 3rd party solar installer after a project is ready to be built… In this example there are three parties:

  1. Solar developer
  2. Solar project real estate owner/Site host/Offtaker
  3. Solar installer

This is a common solar developer insurance scenario with three parties3 however additional parties may be involved.

The solar developer has a contract with the real estate owner. The contract states that the developer will carry general liability insurance with $1,000,000 per occurrence and $2,000,000 aggregate, with no action over exclusion and that the solar developer will name the real estate owner as an additional insured.

The contract also states that any sub-contractors that the solar developer uses will:

  • Carry the same limits of general liability insurance as the developer.
  • Add the real estate owner as an additional insured on their general liability policies.

Both the developer and the solar installer refer to their CG 20 33 “blanket additional insured” endorsements and provide a certificate of insurance listing the real estate owner as an additional insured.

However, the solar installer does not have a direct written agreement with the real estate owner.

As such, the CG 20 33 “blanket additional insured” is not a good choice.

A better endorsement is the CG 20 10 or CG 20 26, or CG 20 38.

As mentioned above, the CG 20 10 and CG 20 26 specifically schedules the name of the additional insured party on the endorsement itself.

In contrast, the CG 20 38 provides coverage for parties you are required to add as an additional insured, in addition to the party for whom you are performing operations.

Footnotes

  1. However, some insurance policies, such as workers' compensation, do not offer additional insured status.
  2. Major changes have occurred to additional insured endorsements over the years, including impacts to fault, ongoing operations and the language of the contract you have in place. As described below, the best way to verify additional insured status is by requesting a copy of the insurance policy with the additional insured endorsement.
  3. The scenario could involve additional sub-contractors or even sub-sub-contractors... In any case, the additional insured status must be verified by your insurance broker.
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