Dueling Additional Insured Endorsements Scheduled (CG 20 10) vs. Automatic (CG 20 33)

Dueling Additional Insured Endorsements Who is an Additional Insured? Independent third party Not already provided insured status by coverage form Policy includes the following as insureds: Named insured listed on the declarations page Those qualifying as an insured because of coverage form Section II-Who Is An Insured Spouse, members, partners, “executive officers”, directors, stockholders and trustees Those qualifying as an insured because of liability classification Members of a club or church, volunteers of a charity, condo unit owners

Dueling Additional Insured Endorsements Non-Insureds Interested third parties such as Project owners General contractors Sub contractors and their sub contractors Lenders Material suppliers Owners/lessors of real or personal property/equipment Vendors/distributors of manufacturers’ …and more

Dueling Additional Insured Endorsements Virtually Everyone! “XYZ Catering, Inc. (d/b/a XYZ Creations), ABC Sports & Entertainment LLC, ABC Holdings LP, the DEF Center, their respective principals, members, officials, officers, directors, shareholders, employees, and agents, their respective parent and affiliate companies and their respective Successors or Assigns as now or hereafter may be constituted and the Centennial Authority, the City of Raleigh, North Carolina, the State of North Carolina and their departments, divisions, commissions, and boards and their respective principals, members, officials, officers, directors, shareholders, employees, and agents have been named as additionally insured’s [sic] under said policy with respect to any legal liability arising out of the Licensee’s performance hereunder.”

Dueling Additional Insured Endorsements How to Achieve Additional Insured Status Change the coverage form by endorsement Commonly use CG 20 10 Additional Insured- Owners, Lessees or Contractors- Scheduled Person or Organization or CG 20 33 Additional Insured- Owners, Lessees or Contractors- Automatic Status When Required in Construction Agreement with You

Dueling Additional Insured Endorsements Know The Difference Standard forms vs. proprietary forms ISO: “© ISO Properties, Inc., 20__” or “© Insurance Services Office, Inc., 20__” Proprietary; not ISO: “Includes copyrighted material of Insurance Services Office, Inc. with its permission”

Dueling Additional Insured Endorsements Similarities Between CG 20 10 and 20 33 Ongoing operations Separate endorsement needed for completed operations CG 20 37 Additional Insured- Owners, Lessees or Contractors- Completed Operations Vicarious and contributory liability Applies to coverage A & B Sole negligence of additional insured not covered

Dueling Additional Insured Endorsements Scheduled Form (CG 20 10) Applies to various entities Owners, lessees, or contractors Not limited to construction agreements, contracts Duration of additional insured status Policy period or upon completion of ongoing operations Whichever occurs first Must be endorsed to renewals “Actively” renewed

Dueling Additional Insured Endorsements Automatic Form (CG 20 33) Applies to various entities Owners, lessees, or contractors But limited to construction agreements, contracts Does not apply to those without this type of agreement such as: Project owner/s Upper or lower tiered subcontractors Material suppliers Lenders Commonly these interests require additional insured status

Dueling Additional Insured Endorsements Automatic Form (CG 20 33)- Continued Agreement or contract must be in writing No AI status without written contract among parties 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 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. © Insurance Service Office Inc., 2012

Dueling Additional Insured Endorsements Automatic Form (CG 20 33)- Continued Limited litigation but some courts have ruled against granting broad status without direct contract Westfield Insurance Company v. FCL Builders 407 Ill App. 3rd 730, 948 N.E. 2d 115 Brooklyn Hospital Center v. One Beacon Insurance 5 Misc. 3d 1029(A) (N.Y. 2004)

Dueling Additional Insured Endorsements Westfield Insurance Company v. FCL Builders 407 Ill App. 3rd 730, 948 N.E. 2d 115 Key players FCL Builders, Inc. - General contractor Suburban Ironworks, Inc.- Subcontractor to FCL JAK Iron Works, Inc. – Subcontractor to Suburban

Dueling Additional Insured Endorsements FCL/Suburban Contract: Required Suburban to perform all structural steel and obtain liability insurance covering Suburban and FCL “The contract mandated that any subcontractors that Suburban might further subcontract with must also maintain the same level of CGL insurance and include FCL as an insured under the policy.” “When Suburban subcontracted the steel erection work to JAK, Suburban and JAK executed a contract that incorporated by reference a previously existing Master Subcontract Agreement between the two parties”

Dueling Additional Insured Endorsements Master Agreement Required JAK to obtain same level of coverage as required by contract between FCL and Suburban Including adding FCL as an additional insured JAK purchased liability coverage provided by Westfield Insurance CG 20 33 was used to provide automatic AI status

Dueling Additional Insured Endorsements Third Party Over Action JAK’s employee (Oshana) fell off of steel beam sustaining severe injuries Oshana filed a tort action against FCL and Suburban Breach of duty Failure to maintain a safe workplace Westfield rejected FCL’s request to defend and pay damages Argued AI endorsement applies only “to entities that had an agreement in writing with JAK for them to be added to the policy as additional insureds.” JAK had a contract with Suburban, not FCL.

Dueling Additional Insured Endorsements Automatic Form (CG 20 33)- Continued Reduces process time demands E&O mitigation When added to renewal policy Eliminates underwriting Not selective All indemnitees are AI if required by written contract Must rely on amending contract to avoid this

Dueling Additional Insured Endorsements Automatic Form (CG 20 33)- Continued Duration of additional insured status Policy period or upon completion of ongoing operations Whichever occurs first Must be endorsed to renewals “Passively” renewed

Dueling Additional Insured Endorsements 2013 ISO Changes Both endorsements have incorporated the following changes with ISO’s countrywide filing effective April, 2013 Effective August 1 in Florida The insurance afforded to such additional insured only applies to the extent permitted by law; © Insurance Service Office Inc., 2012

Dueling Additional Insured Endorsements 2013 ISO Changes Both endorsements have incorporated the following changes with ISO’s countrywide filing effective April, 2013 Effective August 1 in Florida …the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured © Insurance Service Office Inc., 2012

Dueling Additional Insured Endorsements 2013 ISO Changes Both endorsements have incorporated the following changes with ISO’s countrywide filing effective April, 2013 Effective August 1 in Florida With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations;   whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations. © Insurance Service Office Inc., 2012

Dueling Additional Insured Endorsements Scheduled (CG 20 10) Vs. Automatic (CG 20 33)