Additional Insured & Waiver of Subrogation: What are they asking for?
Event Date: December 1, 2015
Author: Tara Sweeney, Account Administrator
An additional insured is a person or organization that receives benefits and protection from the insured’s policy in the event of negligence. The most common policies that request additional insured are commercial general liability and commercial auto policies. When you add a customer as an additional insured you are protecting that customer against negligence your company may do. Additional insured can be added to policies by two types of endorsements that can be used for commercial general liability coverage: (1) ISO endorsements give coverage to the additional insured for liability that arises out of the named insured’s work, operations, or premises. (2) Manuscript endorsements can be more restrictive than the ISO endorsements. You want to review the contract to verify whether the contract requires an ISO or manuscript endorsement.
Primary and noncontributory wording is another important part of your policy to keep in mind. Primary coverage is provided on ISO commercial general liability policies where someone is named additional insured. The commercial general liability policy states that it is excess over any policy that names them as an additional insured when ISO forms are used. Noncontributory can have a few different meanings. If the contract states the coverage is meant to be excess only, then the ISO and additional insured endorsements take care of this. If the contract states that the insured won’t contribute then there could be a problem if the insured agreed that their commercial general liability policy would be the only place of recovery.
You may receive requests to add additional insured to workers’ compensation or cargo coverage, which are policies you do not want to add to. The reason for this being, if you add another party as additional insured on a workers’ compensation policy you would be providing coverage for injuries to the other party’s employees. Cargo insurers generally won’t add an additional insured to a policy because there is an agreement on most cargo policies that state that an additional insured and additional named insured have the same coverage on a cargo form.
Waiver of Subrogation
A Waiver of Subrogation is an agreement between two parties where one party agrees to waive subrogation rights against another in the event of a loss. Subrogation occurs when an insurer pays the insured for a loss, then goes after the negligent third party to reclaim any losses to make the insurer whole. A Waiver of Subrogation Clause is a clause that exists to minimize any additional claims between the parties involved. The results of the risk are then the responsibility of the insurers. An example could be found in an auto accident caused by another driver where there was damage to your vehicle. Your insurer would pay for the damage to the vehicle and subrogate with the other party’s insurance company. However, if you and the other party had a Waiver of Subrogation agreement, regardless of fault, the insurer wouldn’t be allowed to seek damages from the party at fault.
- Boop, Gregory. “Does Your Company Need Additional Insured Coverage?” About.com Money. N.p., n.d. Web. 25 Nov. 2015.
- Postel, Joseph. “What Does an Additional Insured Endorsement Cover?” International Risk Management Institute. N.p., July 2000. Web. 25 Nov. 2015.
- Slavens, Kenneth. “What Is Subrogation and Why Is My Contract Waiving It?” International Risk Management Institute. N.p., Dec. 2000. Web. 25 Nov. 2015.
- Stanovich, Craig. “Primary and Noncontributory.” International Risk Management Institute. N.p., Mar. 2012. Web. 25 Nov. 2015.