By Ken Kukral
One of the most common service requests you will receive is the adding of an additional insured endorsement to one of your clients general liability policies. This request is usually inclusive of a request for a certificate of insurance with a short time line to fulfill your client’s request. Your client needs this for a bid request or to get paid for a job where they forgot to review the contract and send on the insurance portion of the contract to your office so you could review. Sound familiar?
With many requests for an additional insured endorsement being on a last minute basis the chance for errors increases. How should you handle these requests or be proactive with your clients on this important part of their insurance program?
A few helpful hints:
1. Be proactive with your clients. Discuss how you would like these requests to be handled during their annual insurance review meeting. You may even want to have a “form” that you use for all requests so they are handled the same way each time (you may want to have this form on your website) and you have the information you need to timely handle the request.
2. Get a full copy of the contract from the client since the insurance requirements are not always included in the “Insurance” section of the contract. Other things such as waiver of subrogation, indemnity agreements and who specifically is included in the contract may be in other sections of the contract. Keep in mind that you are not an attorney!
3. Stay in contact with your clients. Ask them questions such as if they are working on any new projects, if they took on any new clients or if they are working in any other states. Answers to these questions can be very revealing and can alert you to additional or uncovered exposures. Just asking them if they signed any new contracts will give you something to look at.
4. Next point is one of my personal pet peeves. Unless the contract asks for a specific additional insured endorsement (by number CG20XX), it is your responsibility to determine what additional insured endorsements will best fit the needs of your client and the additional insured. Over 80% of the additional insured requests our office receives are devoid of the actual endorsement number we should use. Do you want to trust that a broker once removed from dealing directly with your client can pick out the best and most appropriate additional insured endorsement that fits your client’s situation?
5. Blanket additional insured. Keep in mind that they are not all the same. Some pick up additional insured where required by contract. Others only pick up additional insured’s that are reported to the carrier.
6. Review the insured versus insured exclusion in your policy. It is best if there is not one of them, but if there is, make sure it is excluding liability only for named insured versus named insured. If it is any insured versus any insured then the insured would not have coverage if they were sued by the additional insured. This is definitely an E&O exposure.
7. If you are using the CG2010 and you want the additional insured to include completed operations, you need to add the CG2137 or the minute they finish the job, they will no longer have coverage.
8. Some additional insured endorsements cost money, some do not. Find out up front when writing a policy so there are no surprises during the policy. Make sure you understand what is needed to add any additional insured when you write a policy so that you can get it done quickly and efficiently.
9. When sending in an additional insured request make sure you explain what their “interest is” (landlord, general contractor, etc.) so that the carrier can understand the relationship with your insured. Many times we just get a generic e-mail asking us: “please XYZ Co. as an additional insured”.
10. Last of all be consistent. Handle additional insured requests in the same manner every time. If you clients understand up front what the “process is” then they will be less resistant to follow the guidelines you have even though it might be a tense or limited time situation. No different than what a pilot goes through before takeoff. Would you feel comfortable asking the pilot to skip the second half of his pre-flight checklist, just because you are running late?
You work hard to write business. You work hard to retain business. So why would you let a standard type of service request such as adding additional insured’s throw a wrench into your whole plan? Handling these requests in a consistent and efficient manner will help to build your image as an excellent service provider and help eliminate E&O issues before they ever even get started.