This article on "additional insureds" for commercial insurance policies written by Geoff Gordon Andrew G. Gordon Insurance Agency? .
in general, it is good to have others you name as "additional insured" (AI) on their policy, but bad for you to name the others on your own. (But not always - this paper explores the two sides). The main point is that when you call someone an additional insured on your policy, you share your insurance with them; when they call you, you piggyback on their insurance.
For example, Ed Electricians (subcontractor), wants to do electrical work for the Builder Bill (general contractor). Bill Builder requires Ed to name it as an additional insured on the policy of Ed responsibility; to get the job, he agrees. Once the project is completed, a fire destroyed the building and the fire marshal determined the fire was caused by the work of Ed. The owner's insurance company pays the loss of heat, then goes after the bill recover the money. The bill, as an additional insured on the policy of Ed gets his defense and losses paid by the insurance Ed, never touch his. The problem arises for Ed defend both exhausted Insurance
Why you ask someone to nominate you as an additional insured :.
- Blocks their insurer to subrogate against you (a common law prohibits "insured" to pursue another "insured").
- Receive Live Political Rights regarding the coverage of the defense.
- acts as a safety net if harmless maintenance agreement becomes inapplicable.
- Provides vicarious liability on defense for the actions of the police and the defense of direct responsibility for your actions.
- Provides higher total limits (you still yours)
- insurance costs reduced today (best insurance costs available when you need the subcontractors you name an "additional insured"
Reasons not to be named as additional insured :.
- defense Loss of control (it is the insurance of the other guy). and dependency on others
- conflict "other insurance" can occur between your policy and their
- possibility of disputes over the increased coverage [
Your reasons to name others as additional insureds
- Close relationship with AI: all members of an insured club
church or a charitable group or unit-owners of Condo Association - business relationship, particularly common with
- project owners, general contractors on policies;
- general contractors on policies;
- owners or lessors of real estate on tenants policies;
- suppliers named on the manufacturers policy
your reasons to avoid naming the other as additional insured on your policy :.
- dilution of your policy your insurance share with someone else limits you are.
- Unintended coverage provided to someone you might not be found with.
Definitions
Hold Harmless agreement When a party (or both parties) agree that if something goes wrong, you agree not to go after them. A subcontractor may be necessary to hold harmless the general contractor, which means that if the GC made a mistake resulting in damage to the sub, the sub will not seek damages
Indemnification Agreement :. Where one party agrees to indemnify, or compensate for damages resulting from actions of another. A subcontractor is invited to "indemnify" -. The general, which means that if the sub is all that results in an action against the General, under the pay
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