New Additional Insured Endorsements: Automatic Status for Completed Operations
Construction contractors, owners, and other construction industry professionals should be aware of two new additional insured endorsements:
- CG 20 39 12 19 Additional Insured – Owners, Lessee or Contractors -Automatic Status when Required in written Construction Agreement with You (Completed Operations)
- CG 20 40 12 19 Additional Insured – Owners Lessees or Contractors – Automatic Status for Other Parties When Required in Written Construction (Completed Operations)
Whether you’re the party being asked to provide or the party requiring these new endorsements, each side needs to be conscious of the benefits and drawbacks.
An analysis of the two endorsements shows that CG 20 40 12 19 provides superior coverage for owners and contractors, as there is no requirement of direct contractual privity between the party requesting additional insured coverage and the named insured. CG 20 40 12 19 provides additional insured coverage to anyone required to be named as an additional insured under a written contract that performs operations for the named insured.
In contrast, CG 20 39 12 19 still requires a direct contractual relationship with the named insured, extending additional insured coverage only “when you and such person or organization have agreed in writing in a contract or agreement that such person …. be added as an additional insured on your policy.”
Both the new CG 20 39 12 19 and CG 20 40 12 19 expressly exclude certain professional services: “bodily injury or property damage arising out of the rendering or the failure to render, any professional architectural, engineering, etc.…, including (1) the preparing, approving, the failure to prepare or approve … drawings, reports, et., and (2) supervisory, inspection or engineering activities.” The current completed operations endorsement, CG 20 37, does not contain any such exclusion.
Consequently, it’s important for owners, contractors and other upstream parties seeking additional insured coverage to be aware of the professional services exclusion and its impact on coverage where the new CG 20 39 12 19 and CG 20 40 12 19 endorsements are concerned.
As a contractor or owner, you should be cautious before agreeing to or requiring these new endorsements. Although the new ISO forms provide some additional benefits, there remain significant differences with the most current completed operations endorsement, CG 20 37.
Proceed with caution and discuss with your insurance broker the appropriate endorsements for your project. The ‘A’ Team is always available for consulting to help you find the best option for your construction business.
- ISO Modifies A Wrap-Up Exclusion
- The ABCs of Indemnity Agreements and Additional Insured Endorsements
- 5 Additional Insured Coverages to Consider
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