Additional Insured Requirements Are Universal
Nearly every commercial construction contract requires you to add someone as additional insured on your policy. Understanding what this means and how it works helps you comply efficiently while protecting your interests.
What Additional Insured Means
When you add someone as additional insured, your liability coverage extends to protect them for claims arising from your work. They can access your policy for defense and indemnity when your operations create claims that involve them.
This is a form of risk transfer. Rather than relying on their own insurance when your work creates problems, they can use yours.
Why Clients Require It
Direct Access to Coverage
Additional insureds can tender claims directly to your carrier. They don't have to sue you first, then wait for your insurance to respond. This is faster and simpler for everyone.
Defense Costs
Your policy provides legal defense for additional insureds when they're named in suits arising from your work. Legal fees add up quickly. Having your policy pay means they don't have to.
Risk Transfer
Rather than self-insuring exposure from your work, clients transfer that risk to your policy. This is standard practice and expected in commercial construction.
Types of Additional Insured Coverage
Ongoing Operations
Covers claims that arise while you're actively working on a project. Most common form.
Completed Operations
Covers claims that arise after your work is finished. Critical for construction because defects often don't manifest until later. Many contracts specifically require completed operations AI coverage.
Common Endorsement Forms
CG 20 10
Standard ongoing operations endorsement. Widely used and accepted.
CG 20 37
Completed operations endorsement. Adds protection after project completion.
CG 20 38
Combined form attempting to address both. May have limitations depending on specific version.
Blanket Additional Insured
Automatically provides AI status to anyone required by written contract. Simplifies administration for contractors with multiple clients.
Limitations on Coverage
Additional insureds get coverage for claims arising from your work, not unlimited protection. Coverage doesn't apply to their own sole negligence. Claims unrelated to your operations aren't covered. Their intentional acts aren't covered.
The AI endorsement extends your coverage to protect them from your mistakes, not from their own.
Meeting Contract Requirements
Before signing contracts, review insurance requirements. Confirm your policy can provide required endorsements. Identify specific forms or language required.
When requesting endorsements, provide the exact legal entity name to be added. Include project information if the endorsement is project-specific. Allow processing time, typically a few business days.
Certificate Compliance
Your certificate of insurance should show additional insured status, reference specific endorsement numbers, and note whether completed operations is included.
Make sure your agent understands exactly what you need. Vague requests lead to incorrect certificates.
Cost Considerations
Additional insured endorsements are usually included at no extra charge. Blanket endorsements may have modest fees. The real cost is that claims paid to additional insureds reduce your available limits.
Common Questions
Does adding someone as additional insured cost extra?
Usually no direct charge. Blanket endorsements may have small fees. The premium impact is typically negligible.
Can I limit additional insured coverage?
Your policy language controls what coverage additional insureds receive. Blanket endorsements often have built-in limitations that protect you.
What if I can't meet a contract's AI requirements?
Negotiate with the client, or consider whether the contract is worth pursuing. Don't sign agreements you can't comply with. That creates breach of contract exposure on top of everything else.