An Additional Insured (AI) extends liability coverage beyond the named insured to include other groups or individuals. It only extends coverage to the AI for the negligent acts or omissions of the vendor/Named Insured (NI).
AI has many of the same responsibilities as the NI but does not pay premiums, receive notices of cancellation or negotiate the terms of the policy. AI can even file a claim.
AI coverage usually provides an upstream party (property owner or property management firm) protection from claims that “arise out of” or are “caused, in whole or in part by” the downstream party’s (subcontractor) acts or omissions.
Additional Insured endorsements cannot be added to Workers Compensation and Employers’ Liability policies in any state.
Endorsements
GL Additional Insured - Ongoing Operations: Typically only covers Liability for the party(s) that the endorsement is afforded to, for Bodily Injury and Property Damage for the work that is actively being performed, not after. Some endorsements can apply to both ongoing and completed, depending on the form language.
Example: A Contractor (Vendor) is hired to rebuild a chimney. While repairing the chimney, the contractor drops a load of bricks from the chimney on top of the neighbor’s greenhouse. This causes property damage arising out of the contractor’s ongoing operations. The neighbors sue (property owner, association, anyone). If the Property owner or association is named as an Additional Insured on this type of form for ongoing operations, whoever was named as additional insured would have coverage and defense as this was an ongoing operations exposure. (this would also apply to bodily injury if instead someone was hit with the bricks rather than the greenhouse)
GL Additional Insured – Completed Operations (AIPCO): Typically covers Liability for the party(s) that the endorsement is afforded to, for Bodily Injury and Property Damage for the work that has been completed (i.e. finished work, a finished building, or a completed project). Some endorsements can apply to both ongoing and completed, depending on the form language.
Example: If a contractor (vendor) is hired to rebuild a chimney and 3 weeks after they finish the job, the chimney falls over on the neighbor’s greenhouse, this is property damage out of completed operations since the job has been completed. If the property owner and/or association is named as an Additional Insured on this type of form for completed operations, whoever was named as AI would have coverage (and defense).
Primary Non-Contributory (PNC): Coverage that defines the order of how multiple policies, on the same loss, is to respond. For example: if a contractor/vendor is required to provide PNC coverage, then it means that the contractor’s/vendor’s policy must pay out before any other policies, and not seeking contribution from any other policies that are also primary.