Additional Insured & Waiver of Subrogation
As construction booms, and the litigious nature in which you operate in grows, requirements for obtaining jobs are becomes more stringent. As these requirements become a more regular requirement, we are often asked about what these coverages mean, how they impact the policy, and what they cost. Below we will dive a little deeper into these options.
This is quite often the first coverage that is required. It may be the general contractor who requires it, the property manager/owner, or another third party with an interest in the project. We recommend all our general contractors require this of their subcontractors to make sure they are protected. So, what is an additional insured? It is an amendment to the policy that extends the liability protection on the policy to the interested party. Because of the amendment to the policy, it will notify the additional insured of a cancellation on the policy that would expose them to a greater liability exposure.
Because of it’s impact on the policy (broadened liability), there is a cost associated with it. Typically starting and $50, although depending on the carrier it could be as high as $150. One way to protect yourself, and the cost, would be to add a blanket additional insured endorsement. This would be a one-time fee on the policy and would provide the additional endorsement to anyone required by contract. If you are a contractor that requires several additional insureds the blanket option can be the most time and cost-effective option. This would a decision that your agent cane help you make based on the specific policy and prices.
A requirement we are seeing more frequently, this is another amendment to the policy protecting the party requesting it. The first step to this coverage is defining subrogation. Subrogation allows your insurance company to recoup damages from the responsible party. For example, you have the commercial truck parked on the job site and someone else backs into the truck causing damage. To get things moving quickly, you file the claim on your own policy to begin repairs and then let your insurance recoup funds from the at fault party. With a waiver of subrogation, the insurance company is unable to recoup the damages from the at fault party.
A waiver of subrogation is often required to protect the interested party against claims. For example, you are doing plumbing in a home and while up in the attic an employee falls through the ceiling due to a rotten board. The claim would be filed against the workers compensation, and then the company would subrogate after the homeowner. If a waiver of subrogation is present the carrier would not go forward with recouping the damages. Like the additional insured, it could be applied to a specific party or purchased as a blanket option.
The accuracy of certificates is crucial to the success of a business. Many agencies are not aware that certificates of insurance, whether not done accurately or timely, can prevent a contractor from getting a job or getting paid. That is why it is important to work with an agency who understands to keep your business successful!
About Us – Barbee Jackson Insurance
Barbee Jackson Insurance is a nationally recognized independent insurance agency that helps a broad range of contractors find the right insurance solutions. Our Contractor Specialists are among the top insurance agents in the industry. With clients throughout the United States and backed by the leading Contractor Insurance carriers.
For help with your construction business contact us at (850) 389-2001
Krytsal Jackson is CFO and Agent at Barbee | Jackson Insurance. She has written several blogs and articles, along with some very popular YouTube Videos, focused around Commercial Lines Insurance in the Southeast.