Simply stated if your business has the potential to create a liability exposure for another (person or business), they will want to be protected by your policy before they agree to do business with you.
Here are a couple of examples:
Restaurant Owner:
You are a restaurant owner (the Insured) that will be leasing a building to operate. In the lease agreement, the building owner requires you to name them as an Additional Insured.
During the lunch rush one day, let’s say a drink spills on the floor and before an employee has a chance to clean it up, another patron slips and seriously injures their back. If a lawsuit follows, most likely you (The Insured) and the Building Owner will be named.
Since the injury was caused by the operations and negligence of the Insured and since the Building Owner is named as an Additional Insured on the Insured’s policy, the Building Owner is most likely protected by the Insured’s policy.
Plumbing Contractor:
You have a remodeling project that involves extensive excavation work. Over the weekend kids come to the jobsite and start playing around in the trench – one of the kids is significantly injured and the parents hire an attorney.
The allegation is that the jobsite was not properly protected for the General Public. Accordingly, The Building Owner and General Contractor (GC) are Named in the suit.
Prior to the project you agreed contractually to name both the Building Owner and GC as an additional insured, meaning they will enjoy the defense and policy limits your policy affords.
A more aggressive Additional Insured endorsement may be needed:
Since the most common Additional Insured endorsement is written to only include ongoing operations of the Insured, this may not be sufficient sufficient for the party that is requesting the additional insured endorsement – particularly in the case of a General Contractor that would like to subcontract work out to skilled contractors.
In this situation a different Additional Insured Endorsement will be required – this will be discussed in a future post.
For assistance with your Commercial Insurance Program, call 636-519-0059 or email (service@hebbeln-ins.com) us today.
Posted by dan@hebbeln-ins.com