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Additional Insured: Why Are They Asking to be Listed on my Liability Policy?

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Let me guess.  You’re an Ohio-based trades contractor and the general contractor or job owner has asked to be listed as an additional insured on your insurance policy?
And, for the eighty-seventh time, the certificate of insurance (COI) you sent them needs to be revised?  You’ve got a hundred other fires to put out, but you can’t start working, or you can’t get paid, until every period and piece of punctuation is in the right place on the cert?
Is that about right?
Let’s face it, some of these contracts/agreements have so many hoops and mid-air somersaults required, it’s like we’re training for Cirque du Soleil!  What’s the deal?

Why are they on my policy to begin with?  Don’t they have their own insurance?

COI requests often come from both the job owner and the general contractor.  And they’re almost always made by written contract (keep an eye out for the ‘insurance requirements’ section).  While some folks just want to see proof that you are insured, others will ask for a litany of limits and endorsements to be shown on, or along with, the certificate.  One of those endorsement requests is that they be listed as an “additional insured” on your liability policy.

For starters, asking for additional insured status is a smart business practice.  Considering all the ways a business can get pulled into a lawsuit, trying to minimize that potential is understandable.  In that respect, keep in mind the following:

  • This is very common. Most liability policies will grant those requests automatically given a contract/agreement in place.
  • The organization asking for additional insured status is simply trying to avoid assuming risk for someone who they’ve hired to work on their behalf. Other typical requests include:

Waivers of Subrogation – saying your company won’t come after theirs.
Notices of Cancellation – wanting to know if your coverage has lapsed.

  • Giving additional insured status ONLY grants them access to your policy limits for the work specified in your agreement.

So that’s that?  I’ve got to give them to keys to my policy then?

For most situations, complying with insurance requirements in the agreement/contract is just part of winning and keeping the job.  However, it is always prudent to scrutinize the contracts.  First off, there may be untenable requirements being asked, in which case there could be room to negotiate.  Secondly, you’ll want to make sure you are in fact in compliance.  Because if you’re not, even if you complete the job and get paid, a breach of contract can come back to bite you.  Bottom line, lack of scrutiny can cost you time and money. And that’s where we come in!

An agent who’s here to help

You’ve got enough on your plate as a trades contractor –keeping safe on the job, getting bids out, and staying profitable.  Teaming up with an insurance agent who knows what to look for and how to help can be essential when it comes to this part of the process.  While agents are not going to pretend to be contract lawyers (as fun as that sounds!), a good agent has probably seen enough of these contracts to offer a sound review.  Wouldn’t you want an agent who’s willing to help minimize the cost of your time, energy, and in some cases, additional premium?

Our agents at Stolly Insurance are willing to put that kind of hustle into the relationships with our policyholders.  If that’s not part of your insurance service experience as an Ohio-based contractor, let us know.  Bring us your contracts; bring us your certificate and additional insured requests.  We are poised and ready to dig deeper and go further on servicing your needs.  All it takes is a call.

Please contact us to set up a meeting to discuss your Insurance Program.