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Discussion Starter · #1 · (Edited)
According to my insurance agent who is a Certified Insurance Counselor which I believe takes a fair amount of edu-ma-cation and experience to achieve, he says adding other companies to your insurance policies as "additional insured" causes your own coverage to be halved.

That is to say if you had a 1 million dollar coverage adding an additionally insured halves coverage for your own company to $500,000. Adding another would go to $333,333 and so on.

Although I do not generally work for GCs since I am a GC myself in the construction, remodeling and home improvement field offering all trades where all work is performed by my staff with no subs involved, occassionally I get an inquiry from a GC. Each time it seems they request this "add us as an additionally insured to your insurance policy" request.

For experienced subs out there, what is the insurance practice for adding thte GC as an "additionally insured" in the field for a sub that works for more than one GC? Do GCs always ask to be added to your policy as "additionally insured"? Do you always oblige? Do you know if this does divide your own insurance coverage in half? What is done to address this issue?

I have always turned them down and kept doing my own thing but I am getting more and more calls for subcontracting work and want to explore the possibility of pursung it.
 

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JumboJack for president!
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i always thought additional insured meant that the other company can collect on your behalf. I think that they can file a claim without you and they can also collect to cover damages without you being involved. If you are talking about adding a company you may do work for. As far as adding gcs, subs, etc i think all it does is cut down on your responsibility and makes for smaller fees.
 

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Wrong, not under current additional insured insured endorsements and this was changed 5 years ago. Where has your agent been.

There was a problem with this under the 1998 and 2001 endorsements, but was fixed with the 2004 endorsements. Read both links below and last link explains the law suit that changed this.

Read the PDF below from the Associated General Contractors website, and do a Google search for "Contractor Additional Insured". All kinds of good info out there.

http://www.agc.org/galleries/conrm/White%20Paper%20-%20Finalriskmanagement.pdf


http://www.mynewmarkets.com/article_view.php?id=95531


So if doing a additional insured, make sure it is a current endorsement. CG 20 10 07 04 and CG 20 37 7 04



The additional insurance thing has been a requirement of all policies for quite a few years. I would bet your policy would require this if you started hiring subs.
 

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brm1109
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I currently have about 5 other companies listed as additional insured (when I received my home contractors license from the state I even had to put them as an additional insured). I never heard anything like that, that it reduced my coverage.
 

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"Additional Insured" clauses are nothing to worry about, and will help you get jobs if you are acting as a sub-trade to a GC.

Your insurance is not halved and you are not providing insurance for the GC. The GC still has to have their own liability insurance for any claims caused by their own work.

The purpose of the Additional Insured endorsement is only to have your insurer handle the GC's defense on claims that are your fault. Your insurer will clear their name from the list of defendents. This way the GC does not have to get their own insurer involved in a claim that really has nothing to do with them.

Traditionally, when a claim happens, the plaintiff will sue every possible person or company that could remotely be involved. Therefore, if you cause damage on the jobsite, odds are that you are not the only person who will be sued, but the GC, the owner, and possibly others will be named in the suit also. It would be a nightmare if each entity had to get their insurance company involved, and why should they all get involved if it was obviously your fault and your insurance company is going to be the one who has to settle irregardless. Plus, the owner and GC don't want to have your claim listed on their Claims History as an event.

These Additional Insured clauses should not cost you anything extra because the insurer is not really providing any extra coverage. All they are agreeing to do is take on a bit of extra legal defense costs to clear the Additional Insured’s name off of the lawsuit that is your responsibility anyway.

On the other hand, there is an "Additional Named Insured" clause which, for example, could be: NeedEstimate Contracting Inc. and/or Mr. Joe Smith. Mr. Joe Smith is an "Additional Named Insured" and can make changes to the policy, cancel the policy, collect premium refunds, make payments, etc. "Additional Insureds" can't do any of the former, plus the insurance agent won't give them any info if asked, but "Additional Named Insureds" can ask questions and get answers from the insurance agent as if they were the primary "Named Insured".

Also if a lawsuit is made that only sues Mr. Joe Smith, the insurance policy can respond; but if Mr. Joe Smith was not an Additional Named Insured then Mr. Smith, as an Individual entity, is on his own (uninsured) even if it is obvious that the claim is because of the way NeedEstimate Contracting Inc.s' business was operating.

Last, by having two names, three names, or maybe even ten names as Named Insureds or Additional Named Insureds does not mean that your liability limits are 50% for 2 names, 10% for 10 names. It just means that any of the names can access the full limits, and potentially if one of the names has already accessed some of the limit, then there is less left for the others. It's kinda like being married with a joint bank account - it doesn't mean you only get 50% of what is in the account; what's counts is who takes out the money first.

BTW, if credentials are important then I'll mention that I have both C.I.P. (Canadian equivalent, if not more, than C.I.C. in USA) plus C.R.M. designations, which is way more edu-ma-cation that just C.I.C. But honestly, all that means is that I know how to study and pass an exam and then potentially forget everything I crammed for. I place way more importance on practical experience in the line of insurance that you need assistance in, which is commercial insurance, specializing in the construction industry.
 

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Average Joe
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Astrix, as a side note to this thread and with regards to your advice on me getting sued...I checked my policy and we clearly do have a "Advertising Liability extension" with a 5 mill limit.

Nothing has happened beyond a warning letter yet, but it's reassuring to know that I may be covered under my policy.

Thanks for that :thumbsup:
 

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Discussion Starter · #7 · (Edited)
Thank you all for the helpful feedback

This forum is amazing because of the particpants.

I posted my question yesterday and had bankable advice within hours.

That alone may be worth at least $20,000 in immediate work, not to mention the $100,000 plus I have turned down in the past year or two.

Thank you everyone for your help with my issue.

Also, I could not figure out how to do a thank you on this forum.
 

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This forum is amazing because of the particpants.

I posted my question yesterday and had bankable advice within hours.

That alone may be worth at least $20,000 in immediate work, not to mention the $100,000 plus I have turned down in the past year or two.

Thank you everyone for your help with my issue.

Also, I could not figure out how to do a thank you on this forum.

We are glad to help.

Now could you do some work on the web site?? Confusing!:thumbsup:
 

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and the site is working well to pull in profitable business but If you have suggestions I am always looking to improve.
Maybe my fity year old eyes, but it appears cluttered and hard to read.
Maybe enlarge it to several pages for the info you are trying to get accross. Just thinking out loud.
Maybe others can chime in to help.

How is the cold treating you?? -2 here this morning.:eek:
 

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Re Heritage's & needestimate's earlier posts:

:thumbup::clap::thumbsup:

That's what I like about this site too --- many members who are helping each other out with their construction business. Glad I can be a small part of it.
 
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