It is standard practice on any construction project: the general contractor requires its subcontractor to obtain certificates of insurance indicating that the general contractor and the property owner are listed as additional insureds on the subcontractor’s commercial general liability (CGL) policy. The general contractor receives a copy of the certificate of insurance that expressly lists both the general contractor and the owner prior to commencing the project. 

But if and when a claim arises, and both of these parties are required to make claims under the CGL policy, will they be covered? There is a line of cases in Illinois that says no.

The Illinois Appellate Court recently revisited this issue in Old Republic Insurance Co. v. Gilbane Building Co. In that case, Gilbane’s subcontract with Air Comfort required Air Comfort to list Gilbane and the property owner, AT&T, as additional insureds on its certificate of insurance. Air Comfort complied. However, the certificate also contained an important disclaimer stating that it did not confer additional rights on the certificate holder outside of those contained in the policy.

As an initial matter, the court reviewed the subcontract and noted that it only required Air Comfort to list Gilbane and AT&T as additional insureds on its certificate of insurance; the subcontract did not require Gilbane and AT&T to be added as additional insureds on the CGL policy. The court acknowledged that its reading of the subcontract was strict and literal, but it would not postulate as to the parties’ intent where the language was unambiguous. Gilbane had the opportunity to include the contractual provisions it wanted, and the court would not insert its own language for that of the parties.

Next, the court explained that being listed as an additional insured does not necessarily mean that you are included as an additional insured on the policy. There are two lines of cases on the subject. If the certificate does not reference the policy, and the terms of the two conflict, then the certificate generally controls as to coverage. However, where the certificate refers to the policy and expressly disclaims any coverage other than that contained in the policy itself, the policy controls.  

Here, the certificate referred to the policy and disclaimed coverage other than that contained therein. The policy stated that additional insureds would be added under the CGL policy where required by contract. But as previously noted, the subcontract between Gilbane and Air Comfort did not require that Gilbane be added as an additional insured. The disclaimer in the certificate put Gilbane on notice that the certificate conferred no additional rights; as a result, Gilbane and AT&T were not additional insureds under Air Comfort’s CGL.

This case serves as an important reminder to ensure that your construction contracts say what they mean. We all know what Gilbane wanted. But the appellate court refused to read additional terms into the contract. 

The lesson to take from this case is, first and foremost, to ensure that your subcontracts (or your general contractor’s subcontracts) plainly require that the general contractor and owner be added as additional insureds on the CGL policy. It is not sufficient to require a certificate of insurance with the parties listed. 

Second, if the certificate of insurance contains a disclaimer, the safest course of action is to review the subcontractor’s CGL policy, because a certificate of insurance with a disclaimer affords the holder no coverage. It is only as valuable as the paper it is printed on.