What Additional Insured Actually Means
You'll hear this phrase on nearly every commercial job. A general contractor hands you a subcontract, and buried in the insurance requirements is a line demanding "additional insured status." The property owner wants it too. Sometimes the lender, the architect, and the project manager all want their names on your policy.
Here's what's actually happening. When you add someone as an additional insured on your general liability policy, you're extending your coverage to protect them from claims that arise out of your work. If a homeowner trips over your materials and sues both you and the GC, your policy responds for both of you.
This isn't charity. It's a contractual requirement driven by risk transfer. The GC doesn't want to tap their own policy for claims caused by your crew. The property owner doesn't want to deal with lawsuits from your operations at all. Additional insured status shifts the insurance burden down the chain to the party doing the actual work.
How It Works in Practice
Let's say you're a plumbing subcontractor on a $2 million apartment build in Riverside. Your contract with the GC requires you to name them and the building owner as additional insureds on your GL policy.
Three months into the project, a tenant in an adjacent unit claims water damage from your rough plumbing installation. They file a lawsuit naming you, the GC, and the property owner. Because the GC and owner are additional insureds on your policy, your carrier handles the defense and any settlement for all three parties.
Without additional insured status, the GC and owner would need to tender the claim to their own policies. Their carriers might then come after you through subrogation. Everyone's rates go up, and the legal costs multiply.
The Two Types of Additional Insured Endorsements
Blanket Additional Insured
This endorsement automatically grants additional insured status to anyone you're contractually required to add. You don't need to call your agent every time you sign a new subcontract. If the contract requires it, the endorsement covers it.
Most commercial contractors should carry blanket additional insured coverage. It saves administrative headaches and prevents gaps when you forget to request a specific endorsement before starting work.
Scheduled Additional Insured
This names specific parties on your policy. You provide your agent with the exact legal name and address, and the carrier issues an endorsement listing them. It's more precise but requires action for every new contract.
Some project owners and government agencies insist on scheduled endorsements because they want to verify their exact legal name appears on the policy. CSLB-licensed contractors working on public works in California will encounter this requirement regularly.
What Additional Insured Coverage Does Not Do
Additional insured status only covers claims arising from your operations. If the GC gets sued for something completely unrelated to your work, your policy won't respond. The coverage is limited to liability created by your activities on the project.
It also doesn't cover the additional insured's own negligence unless the endorsement specifically includes that language. Some broader endorsement forms cover the additional insured's "sole negligence," but this varies by carrier and form. Read the endorsement carefully.
Your additional insured endorsement won't increase your policy limits. The additional insureds share your existing per-occurrence and aggregate limits. If you carry $1 million per occurrence, that's the most available for any single claim, whether it involves you alone or you plus three additional insureds.
Primary and Non-Contributory Language
You'll see this requirement alongside additional insured requests in nearly every commercial construction contract. It means your policy must respond first, before the additional insured's own coverage kicks in. Without this language, both policies might try to share the claim equally, creating disputes and delays.
Most standard CGL policies can accommodate primary and non-contributory language through endorsement. Your agent should confirm this is included when setting up additional insured coverage.
Waiver of Subrogation
Often paired with additional insured requirements, a waiver of subrogation prevents your insurance carrier from suing the additional insured to recover claim payments. Without this waiver, your carrier could pay a claim and then turn around and sue the GC to get their money back, defeating the purpose of the additional insured arrangement.
California construction contracts routinely require both additional insured status and waiver of subrogation. Make sure your policy includes both.
Cost Considerations
Adding blanket additional insured coverage typically costs between $50 and $200 per year on a standard GL policy. Some carriers include it at no additional charge. Scheduled endorsements may carry individual fees of $25 to $75 each.
The cost is minimal compared to the contract requirements it satisfies. Losing a $200,000 subcontract because you can't provide additional insured status is a much bigger expense than the endorsement premium.
Common Mistakes Contractors Make
Starting work before the endorsement is issued. Your contract requires additional insured status before mobilization. If someone gets hurt on day one and the endorsement hasn't been processed, you've got a coverage gap and a contract breach.
Assuming blanket coverage satisfies every requirement. Some project owners require scheduled endorsements with their specific legal entity name. Blanket coverage may not satisfy their risk management department.
Ignoring the ongoing operations vs. completed operations distinction. Some endorsements only cover claims during active work. Others extend to completed operations claims after you've left the site. Construction defect lawsuits often arise years later, so completed operations coverage for additional insureds matters.
Not verifying limits meet contract requirements. If the contract requires $2 million per occurrence and you carry $1 million, adding additional insured status doesn't fix the limits problem.
What to Do When You Get the Request
Call your agent before you sign the contract. Provide them with the contract's insurance requirements section. They should confirm your policy can accommodate all requirements, including additional insured status, primary and non-contributory language, waiver of subrogation, and any specific limit requirements.
Get the endorsement issued before your start date. Request a certificate of insurance showing the additional insured and send it to the requesting party. Keep copies of everything.
Common Questions
Does additional insured status affect my claims history?
Yes. Claims paid on behalf of additional insureds appear on your loss runs and can affect your renewal pricing. You're giving others access to your policy, and any claims they trigger count against your record.
Can I refuse to add someone as an additional insured?
You can, but you'll likely lose the contract. Additional insured requirements are standard in commercial construction. Refusing signals that you either don't understand the industry or can't get the endorsement, neither of which builds confidence.
Do I need additional insured coverage for residential work?
Residential contracts less commonly require it, but sophisticated homeowners and their attorneys increasingly request additional insured status. Having blanket coverage means you're prepared regardless.
What if my carrier declines to add a specific additional insured?
This occasionally happens if the additional insured has a terrible claims history. Work with your agent to find a solution, which might involve a different carrier or a manuscript endorsement.