Question: My contract has a provision requiring the other party to include me as an additional insured on its policies. Do I need to do anything else to ensure that I have coverage if a claim arises?
Answer: Having an agreement that details the other party’s obligation is a great start, but it does not guarantee that the insurance will be available and contain the terms that you requested. The first step to ensuring that you have the coverage that you bargained for is to obtain a copy of the policy containing the additional insured (AI) endorsement or broad coverage language.
Certificates of Insurance
It is not advisable to settle for receiving a Certificate of Insurance. The Certificate does not guarantee that the insurance company has added you as an additional insured; only that the broker intended to add you to the policy. Further, if there are any discrepancies between the coverage listed on the Certificate and the terms of the policy, the latter will control. In fact, Ohio Revised Code section 3938.02 explicitly states, “A certificate of insurance is not a policy of insurance and . . . shall not confer to any person new or additional rights beyond what the referenced policy of insurance expressly provides.” Accordingly, an AI cannot rely on a Certificate of Insurance as evidence of coverage for a claim.
Additional Insured Endorsements
The next step is to review the policies. Additional insured endorsements vary greatly and it is imperative to confirm that the language provides the coverage that the parties intended. The endorsement may be very specific, and explicitly state that it provides coverage only to the person or company listed. The endorsement could specify a category of persons that is added as additional insureds (e.g. managers of premises), and contain a test for determining if a party falls within the AI endorsement. Lastly, the policy endorsement may be a “blanket additional insured” endorsement that provides coverage to any party to whom the named insured is contractually required to provide coverage. As long a party falls into one of these three categories, it will be recognized as an AI under the policy.
However, the examination is not complete even when a policy provides AI status. Insurers have attempted to narrow the coverage provided to additional insureds with various restrictions, such as time limits and causation requirements. Some policies contain provisions stating that the AI benefits will exist only for the time specified in the contract. Insurers write these provisions in such a manner that they can avoid providing coverage after a project is completed.
Insurers also attempt to restrict coverage to the AI only if the bodily injury or property damage results from the negligence of the named insured. Courts have interpreted this language as precluding coverage to an AI except when the evidence establishes that the named insured acted negligently and caused the loss. This may be contrary to the requesting party’s understanding of its AI coverage. Therefore, it is important to review the policy to determine whether there are any limitations to the AI status or insurer’s defense obligation.
Lastly, if the project or relationship spans longer than the initial policy period, confirm with the other party that you are an AI on subsequent policies. The last thing you want to do is wait until after a loss has occurred to determine the availability of insurance. If you are unsure about your AI status or the level of coverage you are receiving, contact coverage counsel for a policy review and recommendation.