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What is Additional Insured?

To start things off, let’s talk about Additional Insureds. What purpose do they serve?

Additional insureds are entities other than the policyholder who are entitled to coverage under an insurance policy. Additional insureds are required to be added to an insurance policy when vendors enter new buildings or properties, or when tenants lease new spaces in order to protect the property manager and the landlord

It’s a way to de-risk the transaction.

Where to find evidence of Additional Insured coverage?

There are four main places where one would find information about Additional Insureds in insurance documents.

1. Description of operations box on the COI.
This is a free text box where the broker can write anything they want, including information about additional insureds. This is the most common place to find information about additional insureds.

2. Acord 101 form
Acord 101 is where a broker writes information that did not fit in the description of operations box because there’s limited space. It’s sometimes necessary to append an extra page where the broker can write in more details. And this is where we’ll also find information about Additional Insured.

3. Checkbox on Acord 25 COI
If you see a checkbox checked off in this column, you know that the additional insured status applies to the respective policy.

4. Additional insured endorsements
Additional insured endorsements are separate documents that amend insurance policies to add additional insureds.

In order to better understand this, let’s review the difference between blanket and schedule endorsements.

Sometimes, Schedule endorsements are required, which means that the endorsement must list the Additional Insureds in the schedule. A schedule is a designated box that tells you who is an Additional Insured.

More commonly, we see Blanket endorsements.

Blanket endorsements provide Additional Insured status to any person or organization that meets a certain description – for example, to managers or lessers. A very common phrase we see on Blanket Additional Insured endorsements is “any person or entity as required per written contract”.

That means if there is an underlying contract between the vendor and property manager or landlord requiring that the latter parties be covered, the property manager and landlord are covered. It all depends on whether there is an underlying contract.

Ongoing Operations vs. Completed Operations

This relates to a very common question we get from our customers.

Completed Operations refers to the scenario where a vendor comes on premises, completes the job, and later on, after the vendor is off-premises and the job is done, an accident happens as a result of the vendor’s work.

Example: vendor comes and hangs a shelf. After they leave, the shelf falls. That accident and resulting liability result from Completed Operations.

There is a very well-recognized code, CG 2037, that indicates Additional Insured status for Completed Operations.

Ongoing Operations refer to a scenario in which a vendor comes on premises, and an accident happens while the vendor is still doing their work.

Example: if a vendor is painting a wall and the paint drips and destroys a rug, that accident and the resulting liability result from Ongoing Operations.

A very common code that is well-recognized for Ongoing Operations is CG 2010. If you see this code in the corner of the page, you know that endorsement is about additional insurance status covering Ongoing Operations.

It’s important to have coverage for both types of operations because, if you don’t, you might find an entire class of risks excluded from the insurance policy. In that case, the property manager and landlord will not be covered for any accident that results from that type of liability.

Blanket Additional Insured

For liability reasons, the Jones team does not advise clients what they should or should not require in terms of insurance coverage. However, we do spot trends and improvement opportunities in our clients’ insurance compliance management processes.

One strategy that has worked well for several real estate and construction companies is switching to accepting Blanket Additional Insured.

Here is what we see happening after our clients adopt Blanket Additional Insured requirement:

Compliance rate goes up
Issues related to Additional Insured requirements are among the top five reasons COIs gets flagged as non-compliant. When our clients switch to accepting Blanket Additional Insured status, we typically see a rapid 15 – 25% increase in compliance.

Time-to-compliance shortens by 24-48 hours
Our data indicates it takes on average between 24 and 48 hours to update a COI with a new Additional Insured. This is mostly due to the back-and-forth this update requires:

⇒ Vendor/tenant contacts their broker
⇒ Broker contacts the insurance company and requests a new Additional Insured to be added to the COI
⇒ Broker issues a new COI

Once Blanket Additional Insureds are accepted to fulfill additional insured requirements, the overall time-to-compliance for a COI goes down.