Insurance Corner: Certificates of Insurance and Additional Wording

Additional Insured wording. What is it? Why do municipalities and contractors I am subcontracting for require it? When should I require it? What could it do to my company?

I am most certain that these are questions you have thought about when bidding a job and looking over the insurance requirements. These are questions that you need answers to!

When an insurance policy is bound, most marine contractors have an endorsement added to their policy called Blanket Additional Insured. This endorsement does not require you to schedule each Additional Insured at an additional premium; instead, it automatically covers the additional insured “per written contract.” When another entity, whether it is a municipality

or contractor, is listed as an additional insured on your policy/certificate, your coverage extends representation.

With this being said, it is important that you require subs to list you as an additional insured on their Certificate of Insurance so that if a claim occurs, their insurance will respond primary up to the per occurrence limit and then yours will respond for the remainder cost, if any. This will only be the chain of insurance pay-outs if your sub has limits at least equal to yours and a written contract is in place requiring you to be listed as an additional insured.

BE CAUTIOUS! When you list another entity as an additional insured, your limits are primary and you will pay for the additional insured’s defense cost, as well as your own. This means that you policy limit will deplete faster than if you had not listed them as an additional insured and hopefully there is enough of your policy limit left to cover the claim. In addition, it is important to consider additionally insuring while job costing. If you do not have a Blanket Additional Insured endorsement scheduled on your policy, adding an additional insured may result in a high additional premium.

Should you have any further questions regarding additional insured wording, contact your agent as each policy may be written different and contain different additional insured forms.

Crystal Zufelt

Kelly White & Associates Insurance, LLC