New Additional Insured Form: Careful Contract Wording Can Enhance Coverage
Commercial property owners, developers, lessors, managers and construction contractors should pay attention to new language in several additional insured endorsements that the Insurance Services Office, Inc. (ISO) has filed with state regulators for use starting April 2013. These endorsements state that the insurance for the additional insured will not be broader than the insurance required in the lease or construction contract. They also specify that, if the contract calls for limits of liability that are less than the policy limits, the lower limits in the contract will apply.
In light of these provisions, it is even more important than before to take care when drafting the contract to describe the desired coverage fully and accurately. Owners and general contractors will want to know what coverage their tenants and subcontractors carry. If the tenant has limits of $2 million, but you only require limits of $1 million in the subcontract or lease, you are walking away from $1 million in coverage.
This language is in the new edition of Additional Insured – Managers or Lessors of Premises (endorsement number CG 20 11 04 13), the endorsement that will apply to scheduled additional insureds a commercial tenant is required to name in a lease. It also is in the new Additional Insured – Owners, Lessees or Contractors endorsements.
A few days ago, I blogged about another new feature of the owners, lessees or contractors endorsements – a handy new form that adds coverage for anyone the contract requires you to add as an additional insured (whether or not they are a party to the contract).
About Harvey: I specialize in Insurance Law and Litigation at Anderson & Kreiger. I recently won an insurance case in the First Circuit, which established useful new law concerning indemnification requirements for settlements. I blogged about that case for Between the Lines here.
Posted In: Additional Insureds