If you’re a New York subcontractor carrying your liability insurance through a surplus lines carrier, you’ve probably run into a familiar situation: the general contractor (GC) sends over a subcontract agreement that requires you to name the GC, the project owner, and various upstream parties as Additional Insureds, along with Waiver of Subrogation and Primary and Non-Contributory endorsements.
On the surface, you might think your Commercial General Liability (CGL) policy already covers all of this. But here’s the trap—especially in the surplus lines world—your policy may not automatically extend Completed Operations coverage to all of those upstream parties. Without the right setup, you could be sitting on a hidden coverage gap that only reveals itself when a claim hits… and by then, it’s too late.
Where the Problem Starts
Most well-written CGL policies include CG 20 38 (“Additional Insured – Owners, Lessees or Contractors – Automatic Status for Other Parties When Required in Written Construction Agreement”) for ongoing operations. This form is a lifesaver because it automatically covers other parties as Additional Insureds while your work is in progress, as long as there’s a written agreement requiring it.
However, many contracts also demand that these same parties be covered for Completed Operations—meaning after your work is finished. That’s where CG 20 37 comes in.
Here’s the catch:
- CG 20 38 = ongoing operations
- CG 20 37 = completed operations
When you look closely, CG 20 37 usually only grants completed operations coverage to the direct party you have a contract with—which is almost always the general contractor. That means the owner, developer, lender, or other upstream parties are left out, even though your subcontract agreement says they must be included.
If a claim arises after your work is done (for example, a slip-and-fall months after project completion), and the owner is sued, your policy might deny coverage because the owner wasn’t specifically included in the completed operations endorsement.
Why This is a Real Problem
Without coverage, those upstream parties can turn around and demand indemnification directly from you. That could mean:
- Paying defense costs out of your own pocket
- Losing the protection you thought you had
- Putting your business at risk of a financially crippling judgment
This isn’t an abstract “insurance nerd” problem—it’s a real-world, high-stakes issue that plays out on construction projects every day.
The Simple, No-Cost Fix
The solution is straightforward and costs you nothing:
Have a separate written agreement signed by all parties—GC, owner, developer, and any other upstream entities—stating that they are to be included as Additional Insureds, with Waiver of Subrogation and Primary & Non-Contributory status, for both Ongoing and Completed Operations.
The magic here is that insurance endorsements like CG 20 37 trigger coverage only if there is a direct written contract between you and the party seeking coverage. By creating a short, standalone agreement that includes everyone, you create that direct contractual link—and your endorsement now applies to all of them.
Why Brokers Don’t Always Catch This
Even seasoned brokers sometimes miss this, especially when working with surplus lines carriers whose forms can differ from standard ISO versions. You need a broker who understands construction risk inside-out and proactively checks that all contractually required parties will truly be covered under both CG 20 38 and CG 20 37.
If your broker doesn’t bring this up before you sign the subcontract, you could be walking into a dangerous gap.
What a Simple Agreement Could Look Like
Below is a sample template you can adapt. It’s intentionally short to keep it easy for all parties to sign without getting bogged down in legal review (though you should always have your attorney approve it).
Additional Insured & Waiver Agreement
Date: ___________________
Project Name & Address: __________________________________________
Subcontractor: __________________________________________
General Contractor: __________________________________________
Owner/Developer/Other Upstream Parties:
(List all parties to be covered)
Agreement:
The Subcontractor agrees to provide and maintain Commercial General Liability insurance coverage naming the General Contractor and all listed upstream parties above as Additional Insureds on a primary and non-contributory basis, with waiver of subrogation, for both Ongoing Operations and Completed Operations.
This agreement shall satisfy the “direct written contract” requirement of Additional Insured endorsements CG 20 38 (Ongoing Operations) and CG 20 37 (Completed Operations) or equivalent forms, and applies to all work performed on the above project.
Signed:
Subcontractor: ______________________ Date: __________
General Contractor: __________________ Date: __________
Owner/Other Party: __________________ Date: __________
This one-page document, when signed by all parties, closes the gap and ensures your endorsements can actually work as intended.
Why You Can’t Afford to Skip This
Here’s a real-world scenario:
A subcontractor installs railings at a commercial building. A year after completion, a tenant leans on the railing, which gives way, causing injury. The lawsuit names the owner, GC, and subcontractor. The GC is covered under the subcontractor’s CG 20 37 endorsement because they had a direct contract. The owner? Not covered—no direct contract. The owner demands defense and indemnity from the subcontractor, and the subcontractor’s carrier denies it.
End result? The subcontractor’s out tens of thousands in defense costs, not to mention the distraction and reputational damage.
One signature on a pre-project Additional Insured & Waiver Agreement could have avoided the whole mess.
Final Word: Protect Yourself Now
Surplus lines CGL policies can be powerful tools, but you need to know exactly how their endorsements operate in the real world. A one-page agreement is a simple, no-cost way to extend protection to all required parties and meet your subcontract obligations without risking a nasty surprise later.
The bottom line: Don’t rely on assumptions. Create the direct contractual link. Close the gap before the job starts.
About BGES Group
BGES Group is one of the leading construction insurance specialists serving New York, New Jersey, and Connecticut. We understand the unique challenges subcontractors face—especially when dealing with surplus lines carriers, complex contract requirements, and high-stakes liability exposures.
Our team knows how to structure policies and endorsements to truly match your contractual obligations, and we’ll walk you through the critical details—like closing the CG 20 37 completed operations gap—before you sign a subcontract.
We’ve built our reputation on protecting contractors from the hidden pitfalls that can turn a profitable job into a financial disaster.
Contact BGES Group today:
📞 (914) 806-5853 – Gary Wallach
📧 bgesgroup@gmail.com
🌐 www.bgesgroup.com