Dueling Additional Insured Endorsements Scheduled (CG 20 10) vs. Automatic (CG 20 33)

DuelingAdditional Insured

EndorsementsScheduled (CG 20 10)

vs.Automatic (CG 20 33)

Dueling Additional Insured Endorsements

• Who is an Additional Insured?– Independent third party

• Not already provided insured status by coverage form

– Policy includes the following as insureds:• Named insured listed on the declarations page• Those qualifying as an insured because of coverage form

– Section II-Who Is An Insured» Spouse, members, partners, “executive officers”, directors,

stockholders and trustees

• Those qualifying as an insured because of liability classification

– Members of a club or church, volunteers of a charity, condo unit owners


• Non-Insureds– Interested third parties such as

• Project owners• General contractors

– Sub contractors and their sub contractors

• Lenders• Material suppliers• Owners/lessors of real or personal

property/equipment• Vendors/distributors of manufacturers’ • …and more


• Virtually Everyone!

“XYZ Catering, Inc. (d/b/a XYZ Creations), ABC Sports & Entertainment LLC, ABC Holdings LP, the DEF Center, their respective principals, members, officials, officers, directors, shareholders, employees, and agents, their respective parent and affiliate companies and their respective Successors or Assigns as now or hereafter may be constituted and the Centennial Authority, the City of Raleigh, North Carolina, the State of North Carolina and their departments, divisions, commissions, and boards and their respective principals, members, officials, officers, directors, shareholders, employees, and agents have been named as additionally insured’s [sic] under said policy with respect to any legal liability arising out of the Licensee’s performance hereunder.”


• How to Achieve Additional Insured Status– Change the coverage form by

endorsement• Commonly use

– CG 20 10» Additional Insured- Owners, Lessees or

Contractors- Scheduled Person or Organization

or– CG 20 33

» Additional Insured- Owners, Lessees or Contractors- Automatic Status When Required in Construction Agreement with You


• Know The Difference– Standard forms vs. proprietary forms– ISO:

“© ISO Properties, Inc., 20__” or“© Insurance Services Office, Inc., 20__”

– Proprietary; not ISO:“Includes copyrighted material of Insurance Services Office, Inc. with its permission”


• Similarities Between CG 20 10 and 20 33– Ongoing operations

• Separate endorsement needed for completed operations

– CG 20 37» Additional Insured- Owners, Lessees or

Contractors- Completed Operations

– Vicarious and contributory liability• Applies to coverage A & B

– Sole negligence of additional insured not covered


• Scheduled Form (CG 20 10)– Applies to various entities

• Owners, lessees, or contractors• Not limited to construction agreements,

contracts

– Duration of additional insured status• Policy period or upon completion of ongoing

operations– Whichever occurs first

• Must be endorsed to renewals– “Actively” renewed


• Automatic Form (CG 20 33)– Applies to various entities

• Owners, lessees, or contractors • But limited to construction agreements,

contracts– Does not apply to those without this type of

agreement such as:» Project owner/s» Upper or lower tiered subcontractors» Material suppliers» Lenders

– Commonly these interests require additional insured status


• Automatic Form (CG 20 33)- Continued– Agreement or contract must be in

writing• No AI status without written contract

among partiesSection II – Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.

© Insurance Service Office Inc., 2012


• Automatic Form (CG 20 33)- Continued– Limited litigation but some courts have

ruled against granting broad status without direct contract

– Westfield Insurance Company v. FCL Builders» 407 Ill App. 3rd 730, 948 N.E. 2d 115

– Brooklyn Hospital Center v. One Beacon Insurance

» 5 Misc. 3d 1029(A) (N.Y. 2004)


• Westfield Insurance Company v. FCL Builders– 407 Ill App. 3rd 730, 948 N.E. 2d 115

• Key players– FCL Builders, Inc. - General contractor– Suburban Ironworks, Inc.-

Subcontractor to FCL• JAK Iron Works, Inc. – Subcontractor to

Suburban


• FCL/Suburban Contract: – Required Suburban to perform all

structural steel and obtain liability insurance covering Suburban and FCL

• “The contract mandated that any subcontractors that Suburban might further subcontract with must also maintain the same level of CGL insurance and include FCL as an insured under the policy.”

– “When Suburban subcontracted the steel erection work to JAK, Suburban and JAK executed a contract that incorporated by reference a previously existing Master Subcontract Agreement between the two parties”


• Master Agreement– Required JAK to obtain same level of

coverage as required by contract between FCL and Suburban

• Including adding FCL as an additional insured

– JAK purchased liability coverage provided by Westfield Insurance

• CG 20 33 was used to provide automatic AI status


• Third Party Over Action– JAK’s employee (Oshana) fell off of steel beam

sustaining severe injuries• Oshana filed a tort action against FCL and

Suburban– Breach of duty

» Failure to maintain a safe workplace

– Westfield rejected FCL’s request to defend and pay damages

• Argued AI endorsement applies only “to entities that had an agreement in writing with JAK for them to be added to the policy as additional insureds.”

– JAK had a contract with Suburban, not FCL.


• Automatic Form (CG 20 33)- Continued– Reduces process time demands

• E&O mitigation– When added to renewal policy

– Eliminates underwriting– Not selective

• All indemnitees are AI if required by written contract

– Must rely on amending contract to avoid this


• Automatic Form (CG 20 33)- Continued– Duration of additional insured status

• Policy period or upon completion of ongoing operations

– Whichever occurs first

• Must be endorsed to renewals– “Passively” renewed


• 2013 ISO Changes– Both endorsements have incorporated

the following changes with ISO’s countrywide filing effective April, 2013

• Effective August 1 in Florida

The insurance afforded to such additional insured only applies to the extent permitted by law;



• 2013 ISO Changes– Both endorsements have incorporated

the following changes with ISO’s countrywide filing effective April, 2013

• Effective August 1 in Florida

…the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured


Dueling Additional Insured Endorsements• 2013 ISO Changes

– Both endorsements have incorporated the following changes with ISO’s countrywide filing effective April, 2013

• Effective August 1 in Florida With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance:

1. Required by the contract or agreement; or

2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less.

This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.


DuelingAdditional Insured Endorsements

Scheduled (CG 20 10)

Vs.

Automatic (CG 20 33)

Documents

Dueling Additional Insured Endorsements Scheduled (CG 20 10) vs. Automatic (CG 20 33)