Additional Insured! Me? Welcome to Blue Monday

Why do bad things seem to happen most on Monday mornings? We even call it “Blue Monday.” Take the builder, for example, who wasn’t named Additional Insured on his exterior painter’s general liability policy.

Our builder came to work one fine Monday morning to discover a voice-mail. His painter had over-sprayed a dozen parked cars in a lot across the street from his three-story townhouse project that was nearing completion. It happened on Saturday, which was windy. Too windy for spray painting three floors up. The cars belong to a pre-owned Corvette dealership. Each Corvette is worth an average $40,000. The estimated cost to re-paint all twelve is over $104,000. The painter admitted he’d messed up big time and lamely explained rain was forecast for the next four days, so he decided to “make hay while the sun shined.”

Our builder’s subcontractor was obviously at fault. Our builder had no part in this loss. When he hired the painter he expected he was dealing with a professional who knew his job. Yet our builder’s general liability policy, not the painter’s, is going to pay the claim. Our builder’s insurance company, not the painter’s, is going to defend him in the lawsuit soon to be filed by the Corvette dealership. They are claiming loss of market value now that they have to disclose to customers that their inventory had been damaged. This is going to get ugly and consume large amounts of our builder’s time. His insurance company may not renew his policy. Why? Simply because our builder was not named Additional Insured on the painter’s policy.

So, what’s so important about being named Additional Insured anyway?

When you require your subcontractors to list you as Additional Insured on their general liability policies, you become entitled to insurance coverage benefits under their policies.

Additional Insured status is most often used in connection with an indemnification agreement, also known as a hold-harmless clause. Hold harmless clauses are common in properly executed contracts between you and your subcontractors.* Under a hold-harmless, your subcontractors agree not to hold you responsible for their negligent acts which may happen while they are working for you. Without you being Additional Insured on your subcontractors’ policies, you can be brought into any suit resulting from your subcontractors’ negligent acts. Without a contract clearly holding you harmless, your general liability insurance company may have to cover the loss and defend you if you are sued. They may seek reimbursement from your subcontractors’ insurance companies, or the subcontractors themselves. Your insurance premium could increase due to the greater exposure, or your insurance company may even decide to not renew your coverage.

Additional Insureds! Hold-harmless clauses! Contracts! Maybe every day is Blue Monday when you have to deal with such things. Consider this, however; why jeopardize your insurance coverage because an incompetent painter decided to use a spray gun on a windy day? The RWC Insurance Advantage is committed to providing you with the best possible general liability insurance protection. But, we need your help.

Here’s a checklist:

  1. Review your contracts with all your subcontractors.*
  2. Are you named Additional Insured on all their general liability policies?
  3. Do they all hold you harmless for all claims while working for you?
  4. Do you obtain up-to-date certificates of insurance every year from each one?

If you have questions about this article, or would like us to review your general liability insurance needs, we’d like to hear from you. Contact us at . Make Blue Monday a little less blue.

*(Please consider consulting an attorney if you need assistance in drafting contract language. This article is intended to help you better understand general liability insurance terms and coverages. It is not to be construed as legal advice. Terms and conditions of various insurance company policy forms may vary.)

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