Additional Insureds in Workers Comp

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Additional Insureds in Workers Comp

Postby michelledann » Wed Jul 23, 2008 2:16 pm

It seems endorsing a workers comp policy with an additional insured is prohibited by every carrier with the exception of the State Fund. Of course I hear the additional insured endorsement is very limited through State Fund. How do you get around this without being obligated to use SCIF?
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Re: Additional Insureds in Workers Comp

Postby Almost40 » Thu Jul 24, 2008 11:01 am

We moved a large account from State Fund with over 300 certificates. We had provided the AI endorsement to about 15 of those certholders. The new carrier does not provide the AI endorsement and not one of those 15 certholders had an issue with the lack of the endorsement. Our client continues to perform work for those same folks so the lack of the AI endorsement apparently is not a problem. :D
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Re: Additional Insureds in Workers Comp

Postby SFOInsuranceLady » Thu Jul 24, 2008 12:18 pm

Hi Michelle,
Boy....does this sound familiar! We deal heavily with the non-profit sector, many of whom get their fuding from local and state agencies. This has come up so many times. I simply contact the agency requesting the AI endorsement on the worker's comp. and tell them that the companies do not add AI's on WC policies. I have never had a problem with this. It just seems that these agencies requesting the AI endorsements try to get everything and anything they can. Try not to be so willing to issue AI certs...you'd be surprised how much power you have! :wink:
There has never been an issue with our clients receiving their funding. What type of client is asking for this?
The reason why I ask is becasue if it's a contractor adding a sub as an AI, it sounds like they are trying to get around having the sub purchase Comp. insurance (there are so many unlicensed subs in california it's pathetic). If they aren't licensed, chances are they are not insured. Cross-sell and offer to get a comp quote for he sub! :D
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Re: Additional Insureds in Workers Comp

Postby Big Dog » Thu Jul 24, 2008 1:02 pm

Legally, an "Additional Insured" cannot be endorsed on to a Workers' Comp policy because they have no direct ownership in the insured.

It doesn't surprise me that the CA State Fund would come up with some hinky way to do it. When push comes to shove, it won't hold up in court.
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Re: Additional Insureds in Workers Comp

Postby rcenters » Fri Jul 25, 2008 9:52 am

Ignoring for a moment the availability, or lack thereof, or inability to actually do an AI for WC, what exactly are they trying to accomplish with AI status?
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Re: Additional Insureds in Workers Comp

Postby Santa Rosa Ins Broker » Fri Jul 25, 2008 10:28 am

Keep in mind I am a former State Fund Underwriter, so from experience.

The intent of the State Fund endorsement for Additional Insured Employer is to clarify in those situations when a Joint Employment, Borrowed Servant, Lent Employee exposure exists, the policy to which the additional insured status is endoresed will respond to a claim.

It is not uncommon in the construction industry on some projects, where the same subs work for the general contractor, for the general constractor to ask the subs employees to assist with raising a wall or some other task. In some cases these employees become injured as their attorney starts looking to name everyone. The endorsement just clarifies that in these situations the subcontractors insurance agrees to cover the claim.
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Re: Additional Insureds in Workers Comp

Postby rcenters » Fri Jul 25, 2008 10:31 am

Ah , that makes sense. But I have a feeling it is probably requested by certain companies who take the approach of asking for everything that they've found in some list, where those shared employee functions aren't present.
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Re: Additional Insureds in Workers Comp

Postby etimer » Fri Jul 25, 2008 12:51 pm

A problem can arise when the contractor temporarily lends or leases its employees to someone else. Would not the alternate employers endorsement WC 00 03 01 A cover such employees under the contractor’s workers compensation policy?

I always take the stance that a request for additional insured status under a contractor’s workers compensation policy is are inappropriate and should be not be in the contract.

WC is to cover injuries to the insured’s employees. If you add a project owner to a workers compensation policy it would probably violate the 3.A.5 of the NCCI Basic Manual for Workers Compensation. It says separate legal entities may be insured in one policy only if the same person, or group of persons, owns the majority interest in such entities.
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Re: Additional Insureds in Workers Comp

Postby jldu1056 » Tue Jan 20, 2009 4:27 pm

Thank you for all the information. It is really appreciated.
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