What New York Contractors Need to Know About Their Liability Policies When Adding Additional Insureds — A Must-Read for Everyone!

In New York’s high-risk construction industry, General Contractors (GCs) and subcontractors face enormous legal and financial exposure. A common risk transfer strategy is requiring subcontractors to list the GC, the project owner, and other upstream parties—such as property managers, developers, and lenders—as Additional Insureds (AIs) on their liability insurance policies.

But here’s the reality: simply asking to be named as an AI isn’t enough anymore.

Many modern insurance policies—especially those written by surplus lines carriers—mandate a direct written agreement between the subcontractor and each upstream party requesting Additional Insured status. If such an agreement doesn’t exist, insurers can and do deny coverage, leaving GCs and owners exposed to lawsuits, defense costs, and settlements.

The solution? A short, signed “side agreement” between all parties.

And here’s a critical step that’s often overlooked:

At the time of negotiating the subcontract, the subcontractor should ask the General Contractor to ensure that all upstream parties (owner, property manager, lender, etc.) agree in writing to be part of the AI agreement. This ensures that coverage will trigger if a claim arises—and prevents costly surprises later.

Let’s walk through the risks, the solution, a sample agreement, and how BGES Group can help contractors across New York, New Jersey, and Connecticut navigate it all with confidence.

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Why a Written Agreement Matters

Most construction liability policies—especially surplus lines forms—state that Additional Insured coverage only applies when there is a written contract or agreement directly between the subcontractor and the Additional Insured party. Without that, even if the COI and endorsements look perfect, the carrier may refuse to defend or pay a claim.

You might think your contract with the GC covers it. It doesn’t—unless the GC and upstream parties are all included in a valid, signed agreement with the subcontractor. Many policies strictly interpret this condition.

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The Smartest Move: Make the GC Responsible for Upstream Signatures

To avoid being left in a dangerous position, subcontractors should negotiate the following condition into the subcontract:

“General Contractor agrees to obtain the written agreement and signature of all upstream parties (owner, property manager, lender, etc.) confirming their agreement to be named as Additional Insureds on Subcontractor’s insurance policy for both ongoing and completed operations.”

This puts the responsibility where it belongs—with the GC, who has the relationships and leverage to obtain those signatures from upstream entities. It also ensures that the subcontractor’s carrier can’t deny coverage later because of a missing written agreement.

This one step can be the difference between having insurance work for you—or watching it fall apart during a million-dollar claim.

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The Power of a Side Agreement

A simple side agreement—signed by all parties—satisfies the policy’s written agreement requirement and avoids the cost and time involved in securing custom endorsements.

This document:

• Provides legal clarity

• Meets insurer conditions

• Costs nothing to implement

• Prevents denied AI coverage

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Sample Direct Written Agreement for Additional Insured Coverage

DISCLAIMER: This is a sample for educational purposes only. We are not attorneys and this is not legal advice. Always have your contracts reviewed by legal counsel.

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ADDITIONAL INSURED AGREEMENT

This Agreement is made as of [Insert Date]

PARTIES:

• Subcontractor: [Subcontractor Company Name], [Address]

• General Contractor: [GC Company Name], [Address]

• Project Owner: [Owner Name or Entity], [Address]

• Property Manager: [If applicable]

• Lender/Mortgagee: [If applicable]

• Project Location: [Job Address or Project Name]

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PURPOSE

This Agreement sets forth the Subcontractor’s obligation to provide Additional Insured coverage to the above-named parties in connection with the project listed above.

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TERMS

1. Additional Insured Coverage

Subcontractor agrees to obtain and maintain Commercial General Liability insurance that names the General Contractor, Project Owner, Property Manager, and Lender as Additional Insureds for both ongoing and completed operations.

2. Primary and Non-Contributory

Such coverage shall apply on a primary and non-contributory basis with respect to any other insurance held by the Additional Insureds.

3. Waiver of Subrogation

Subcontractor agrees to waive subrogation rights in favor of all listed Additional Insureds.

4. Proof of Coverage

Subcontractor shall provide Certificates of Insurance and a copy of the policy endorsement naming all parties as Additional Insureds upon request. Certificates alone are not sufficient.

5. Policy Limits

Liability limits shall be no less than $1,000,000 per occurrence and $2,000,000 general aggregate, or as required by the contract.

6. Survival of Obligation

This obligation shall survive the completion of the work and remain in effect for the duration of applicable statutes of limitations and repose.

7. Indemnification Clause

Subcontractor shall indemnify and hold harmless the Additional Insureds from any and all liabilities arising out of their work to the fullest extent permitted by law.

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SIGNATURES

Subcontractor

Company: ____________________________

By: _________________________________