Patrick,
Good article. You list three good reasons why Jimmy’s customers want to be an additional insured on Jimmy’s policy. But there is another big reason you left out.
4. They are afraid that one of Jimmy’s crew gets hurt on the remodeling job and, even though Jimmy has Workers Compensation coverage, the employee collects and sues Frank alleging a dangerous condition on the premises caused his injury.
IT’S LIKE GOING BACK TO INSURANCE SCHOOL. GREAT EXPLAINATION. ALSO, AN AGENT CAN ALWAYS SEND A COPY OF THE CONTRACT TO THE UNDERWRITER WHEN REQUESTING AN A/I ENDORSEMENT.
Thanks, Mike. As a former underwriter, I have welcomed the opportunity to review a contract. Not only does that help us to analyze the real need, but it can provide a great learning opportunity for the underwriting team.
I was not sure where I should post this but here goes. I have companies who are asking about updates to electrical systems on older buildings. At the current time I have two buildings occupied by First National Bank at both locations. One was built in 1971 and other in 1980. I am sure they were both built with state of the art electrical systems at the time. Is there a safety engineer out there that can tell me what the problems would be with their electrical systems. I am not aware of major innovations in electrical wiring of buildings in a long time.
This is a good article that highlights the importance of understanding the type of additional insured endorsement being used.
I would go one step further and add that a written contract should be a requirement in all situations involving a contractor and owner. The contract can be a simple one page document and should not burden either party. The reason I think this is important is that the contract can clear up potential problems before they arise.
For example, the contract would stipulate that the GC will indemnify the deli owner (if insurance lapses or limits are not enough the GC is still on the hook for the balance. The GC will waive subrogation rights, The GC is responsible for defense costs while liability is being determined, the GC must require all subs to name the deli as additional insured, no exclusions for certain types of work can be included, the GC must notify the deli owner if coverage lapses, etc.
It is also very important to have products and continued operations coverage as part of the additional insured endorsement. If a customer falls because the handrail was installed poorly the GC should cover that exposure. Even honest and skilled contractors make mistakes that may not materialize for years after the project is complete so the owner needs to ensure he is protected.
I agree that even a simple written contract helps to clarify the working relationship and clarity makes life easier.
I like that you’re thinking about the completed operations exposure. I only bounced off it in the post and wondered if anyone would mention it. I agree. If I were advising either of them, I would mention it so that there’s protection. As you say, accidents happen and that’s one of the reasons that we have insurance.
Patrick,
Good article. You list three good reasons why Jimmy’s customers want to be an additional insured on Jimmy’s policy. But there is another big reason you left out.
4. They are afraid that one of Jimmy’s crew gets hurt on the remodeling job and, even though Jimmy has Workers Compensation coverage, the employee collects and sues Frank alleging a dangerous condition on the premises caused his injury.
That’s an interesting point I hadn’t thought of. Great insight. Thanks!
IT’S LIKE GOING BACK TO INSURANCE SCHOOL. GREAT EXPLAINATION. ALSO, AN AGENT CAN ALWAYS SEND A COPY OF THE CONTRACT TO THE UNDERWRITER WHEN REQUESTING AN A/I ENDORSEMENT.
Thanks, Mike. As a former underwriter, I have welcomed the opportunity to review a contract. Not only does that help us to analyze the real need, but it can provide a great learning opportunity for the underwriting team.
Good job, Patrick, I like your style and I feel you will attract more readers to the Insurance Journal.
Thanks, Frank! I’m having a great time writing these. I’m glad they’re connecting with people.
I was not sure where I should post this but here goes. I have companies who are asking about updates to electrical systems on older buildings. At the current time I have two buildings occupied by First National Bank at both locations. One was built in 1971 and other in 1980. I am sure they were both built with state of the art electrical systems at the time. Is there a safety engineer out there that can tell me what the problems would be with their electrical systems. I am not aware of major innovations in electrical wiring of buildings in a long time.
This is a good article that highlights the importance of understanding the type of additional insured endorsement being used.
I would go one step further and add that a written contract should be a requirement in all situations involving a contractor and owner. The contract can be a simple one page document and should not burden either party. The reason I think this is important is that the contract can clear up potential problems before they arise.
For example, the contract would stipulate that the GC will indemnify the deli owner (if insurance lapses or limits are not enough the GC is still on the hook for the balance. The GC will waive subrogation rights, The GC is responsible for defense costs while liability is being determined, the GC must require all subs to name the deli as additional insured, no exclusions for certain types of work can be included, the GC must notify the deli owner if coverage lapses, etc.
It is also very important to have products and continued operations coverage as part of the additional insured endorsement. If a customer falls because the handrail was installed poorly the GC should cover that exposure. Even honest and skilled contractors make mistakes that may not materialize for years after the project is complete so the owner needs to ensure he is protected.
You make some excellent points Mike.
I agree that even a simple written contract helps to clarify the working relationship and clarity makes life easier.
I like that you’re thinking about the completed operations exposure. I only bounced off it in the post and wondered if anyone would mention it. I agree. If I were advising either of them, I would mention it so that there’s protection. As you say, accidents happen and that’s one of the reasons that we have insurance.
Thanks for taking time to comment!