ADDITIONAL INSURED INTERESTS UNDER LIABILITY COVERAGES

The preceding sections deal with additional insured interests under policies covering items of real and personal property. There are circumstances, usually limited to commercial policies, in which a policyholder may need to add another person or business as an additional insured under the policies’ liability coverages. Common situations in which this can occur include a wide variety of circumstances. Insuring Other Interests 31 ◆ Construction contractors may be obligated under contracts with property owners for whom the contractors are performing services to add the owner as an additional insured under the contractors’ policy for liability arising out of the contractor’s work for the owner. Similarly, construction subcontractors may be contractually obligated to add the developer or general contractor they are performing services for as an additional insured for liability arising out of the subcontractor’s work. ◆ Persons who lease business premises may be obligated to add the owner of the premises as an additional insured for liability arising out of the use and occupancy of the premises pursuant to the lease. ◆ Churches and charitable organizations may obtain additional insured endorsements extending coverage to officers, trustees, board or vestry members, or volunteers in other roles, while they are acting in their respective capacities for the church’s or organization’s activities. There is a wide variety of standard form additional insured endorsements, including, in some cases, more than one form that may apply to a particular situation. If an inappropriate version of such an additional insured endorsement is obtained, the person or company to whom you owe the obligation to procure additional insured status may not receive the expected coverage. It could result in that person or company turning to you personally for the costs of the defense in the event of lawsuit or for paying a claim in the event of a loss that would have been covered if the correct form of additional insured endorsement had been employed. It is beyond the scope of this book to detail all the different types of additional insured endorsements available or to detail when a particular form of additional insured endorsement is more appropriate than another in a given circumstance. In order to help ensure that you obtain the correct additional insured coverage for your particular circumstances, it is important that you provide as much information as possible to your agent or broker. This may 32 The Complete Book of Insurance include copies of your leases or contracts with parties who require additional insured status under your policy. This will help to assure that the correct or most appropriate additional insured endorsement is added to your policy and that the person or other company added as an additional insured is correctly specified. It is also important to specify the activities for which additional insured status is sought so the additional insured is not receiving coverage that is broader than that required by the terms of the lease or contract in question. Finally, for some persons or entities that are receiving coverage as additional insureds under the policies of another person or company, it is necessary that they inform their own agent or broker of that fact, so that he or she can take appropriate steps to coordinate the coverages. Specifically, if a person or company is an additional insured under the policy of another, the insured may want that additional insurance to apply to claims or lawsuits as primary insurance. In those situations, it would want the coverage of its own policy to apply only as excess coverage, that is, only after exhaustion of its coverage as an additional insured under the other party’s policy.

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