In the complex world of New York construction insurance, contractors often face a maze of requirements to ensure they’re adequately protected. Key among these requirements are the additional insured endorsements, waiver of subrogation clauses, and primary and non-contributory endorsements. These elements can be both advantageous and challenging, depending on the specifics of the construction project and the contractual agreements in place. In this article, we’ll break down the positives and negatives of these critical components and explore how they can impact your general liability coverage.
Additional Insured Endorsements: Pros and Cons
1. Ongoing Operations Coverage
– CG 20 10 4/13: This endorsement provides coverage for the additional insured (AI) during the contractor’s ongoing operations. The specific project must be listed, and coverage applies only while the contractor is actively working on the project.
Positives:
– Project-Specific: Ensures coverage is directly tied to the listed project, which can prevent misunderstandings.
– Focused Coverage: Limits coverage to the period of active work, reducing the insurer’s risk and potentially lowering costs.
Negatives:
– Limited Duration: Once the work is completed, this endorsement no longer provides coverage, leaving the AI potentially exposed to claims arising after project completion.
– CG 20 33 4/13: Similar to the CG 20 10, this endorsement automatically grants AI status when required by a written contract, provided there’s privity of contract.
Positives:
– Automatic Coverage: AI status is automatically applied, ensuring seamless coverage without additional paperwork.
– Contractual Privity: Ensures that only parties directly involved in the contract are covered.
Negatives:
– Ongoing Operations Only: Like CG 20 10, coverage is limited to the contractor’s active work on the project, with no protection post-completion.
– CG 20 38 4/13: This endorsement extends coverage to parties referred to in the construction agreement who are not in direct contractual privity with the contractor.
Positives:
– Broad Coverage: Extends protection to a wider array of stakeholders, which can be advantageous for complex projects involving multiple parties.
– No Privity Required: Allows coverage for entities without a direct contract, offering greater flexibility.
Negatives:
– Ongoing Operations Only: Coverage is again limited to the period of active work, with no post-completion protection.
2. Completed Operations Coverage
– CG 20 37 4/13: This endorsement is designed for completed operations, extending coverage after the contractor’s work is finished.
Positives:
– Extended Protection: Ensures that the AI has coverage for claims arising after project completion, which is crucial for long-term protection.
– Project-Specific: Tied to specific projects, reducing ambiguity in coverage.
Negatives:
– Post-Completion Only: This form does not provide coverage during the contractor’s active work on the project, necessitating additional endorsements for full protection.
– CG 20 39 12/19 and CG 20 40 12/19: These endorsements offer automatic coverage for completed operations when required by a written contract. The CG 20 40 is broader, covering parties without direct privity.
Positives:
– Automatic Status: Simplifies the process by automatically applying coverage as required.
– Broader Protection (CG 20 40): Covers more stakeholders, making it ideal for large-scale projects with many involved parties.
Negatives:
– Professional Services Exclusion: Both endorsements exclude claims arising from professional services, such as architectural or engineering activities. This could leave certain stakeholders unprotected.
Waiver of Subrogation: Balancing Protection and Risk
– CG 24 04 Waiver of Transfer of Rights of Recovery Against Others to Us: The 2019 version of this waiver endorsement eliminates ambiguity from previous versions and broadens the scope of the waiver to a wider set of policies.
Positives:
– Broad Application: Expands the waiver’s scope beyond just CGL and PCO coverage parts, offering more comprehensive protection.
– Clarified Language: The updated language reduces confusion and ensures that the waiver applies even without direct contractual privity.
Negatives:
– Limited by Insured’s Own Waiver: The waiver is conditioned on the insured’s own waiver of claims prior to the loss, potentially narrowing the scope of protection.
– CG 24 53 Automatic Waiver: This form automatically applies the waiver of subrogation, simplifying the process for contractors and insurers alike.
Positives:
– Automatic Application: Reduces administrative burden by applying the waiver without additional steps.
– Equivalent Protection: Offers the same protection as CG 24 04 but with the ease of automatic inclusion.
Negatives:
– Potential Overreach: Automatic waivers may apply in situations where the insured might prefer to retain subrogation rights, potentially increasing risk.
Primary and Non-Contributory Endorsements: Expanding Coverage
– CG 20 01 Primary and Non-Contributory Endorsement: This endorsement has been revised to include coverage for liquor liability, extending its applicability.
Positives:
– Broader Coverage: The inclusion of liquor liability makes this endorsement more versatile, protecting contractors in a wider range of scenarios.
– Priority of Coverage: Ensures that the contractor’s policy is primary, reducing the likelihood of disputes with other insurers.
Negatives:
– Complexity in Claims: The broader application can lead to more complex claims handling, particularly in industries where liquor liability is a significant concern.
Conclusion
Navigating the intricacies of general liability policies for New York contractors requires a deep understanding of the various endorsements available, including additional insured, waiver of subrogation, and primary and non-contributory forms. Each has its own set of advantages and potential drawbacks, depending on the specifics of your project and contractual agreements.
As New York construction insurance specialists, BGES Group is here to help you make informed decisions about your business insurance needs. Whether you’re dealing with complex contractual requirements or looking to ensure comprehensive coverage, we can guide you through the process. Contact Gary Wallach at 914-806-5853 or bgesgroup@gmail.com for expert advice and tailored insurance solutions.
BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health. Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.
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Disclaimer:
This article is for informational purposes only and does not constitute legal or insurance advice. Contractors should consult with their insurance professionals and legal advisors to ensure their policies meet their specific needs and contractual obligations.