Additional Insured – Completed Operations
How often the general contractor denies “blanket” additional insured, or CG 20 38 Additional Insured-Owners, Lessees or Contractors – Automatic Status for Other Parties When Required in a Written Construction Agreement? The problem is that in the construction contract between the general contractor and subcontractor, the subcontractor may be required to include the general contractor as an additional insured for completed operations coverage for a period of six years after the subcontractor’s work is finished. While the current “blanket” additional insured endorsement CG 20 38 does meet a portion of the insurance requirements – to protect the additional insured for certain bodily injury or property damage claims that take place during the project – the CG 20 38 specifically excludes any bodily injury or property damage that takes place after her customer’s work is finished.
And why in the world would a general contractor want to be an additional insured six years after the subs work is finished? Let’s review an example that shows the rationale behind completed operations coverage for an additional insured.
Example: A general contractor has been hired to remodel a building. Much of the work, such as HVAC, electrical, plumbing, and site preparation, is completed by trade subcontractors hired by the general contractor. Eight months after the building has been completed by the general contractor and put to use as an office space, a small fire breaks out in the mechanical room, injuring two workers of the office. When it is determined that the fire was the result of sloppy electrical work, the general contractor is sued by the injured people for bodily injury.
Additional Insured – Completed Operations CG2037
On the other hand, if the electrical subcontractor had listed the general contractor as an additional insured on its policy using CG2037 – Additional Insured – Owners, Lessees or Contractors – Completed Operations, the general contractor would have been covered as an additional insured by the electrical contractor’s CGL policy, provided the electrical contractor’s acts or omissions, at least in part, caused the bodily injury to the workers.
It is commonplace for general contractors to not only require additional insured coverage on the CGL policies of all subcontractors, but to also require the additional insured coverage to apply bodily injury or property damage that takes place both during and after the project is finished. The CG2037 – Additional Insured – Owners, Lessees or Contractors – Completed Operations has been specifically written to provide coverage to the additional insured for certain bodily injury or property damage claims that occur after the project is finished.
Extended Completed Operations Coverage
While a general contractor surely has its own liability insurance program (sometimes called its “practice insurance program”), they can also purchase a separate project specific liability insurance program. The extended completed operations coverage is a non-standard endorsement that states the general contractor’s completed operations coverage will continue beyond the policy expiration and continue for 10 years after substantial completion of the construction project. In other words, if a completed operations claim happened after the project is complete, the general contractor’s project-specific CGL policy would have terminated – but the extended completed operations coverage would still be in effect and thus would apply to certain types of bodily injury or property damage that takes place up to certain number of years after the school project is completed.
Extended Completed Operations Coverage and Additional Insured. Adding an additional insured for completed operations to the general contractor’s project-specific policy is also straightforward – through use of the CG 20 37 Additional Insured – Owners, Lessees or Contractors – Completed Operations and by listing the additional insured on this endorsement, coverage will apply to the additional insured for the entire period of the extended completed operations endorsement found in the general contractor’s CGL policy.
Conclusion
Completed operations coverage for additional insureds is often overlooked or may not be available. Some insurers have their own proprietary additional insured endorsements, which may or may not include completed operations coverage for the additional insured.
The Insurance Services Office (ISO) additional insured endorsements generally exclude products-completed operations coverage; so if completed operations coverage is required for the additional insured, the CG2037 – Additional Insured – Owners, Lessees or Contractors – Completed Operations is often needed.
In some instances, the liability coverage provided by a project-specific policy that includes extended completed operations may be a good option – and one that can be further amended to provide coverage for the additional insured during the entire period of the extended completed operations coverage by using CG2037 or a similar endorsement.
Paperless’ casualty brokers are well versed in the nuances of the various available additional insured endorsements, both project and practice GL coverage structures, and the need for and availability of extended completed operations. Please contact your Paperless casualty broker with any questions or for additional information.
Legal Disclaimer: Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
This article was originally published by AmWINS Group, Inc.