Primary & Non-Contributory

Adding primary and non-contributory language for an additional insured on a certificate of insurance (aka “COI”) means that the insured is engaging in a form of contractual risk transfer and providing broader protections to another party in the event of a liability claim.

Let’s break it down!

Primary refers to the priority of coverage (which party’s insurance will be triggered first) in the event of a claim.

In the case of the landlord requiring the tenant to include primary and non-contributory language as part of an additional insured agreement, the landlord is requiring the tenant’s insurance to be primary in the event of a claim (same goes when a landlord or property managers require primary and non-contributory language to a vendor).

In an insurance context, the word contributory invokes the concept of proportionate share of the obligation to pay for a loss.

When two or more insurers provide coverage for the same party and claim, the contribution will default to equal amounts in terms of the share allocated to each insured, or by their limits of insurance. Each insured has the right to seek contribution from the other insured proportion to their share of the total loss.

However, non-contributory means that, in the event of a claim, the tenant or vendor’s insurance will not seek contribution from the landlord’s insurance.

Requiring a primary and non-contributory provision for a vendor or tenant’s insurance helps protect the landlord by making the tenant or vendor’s insurance first in line to pay out in the event of a claim.

Click here to learn how to find Primary and Non-contributory on COI while auditing!