Additional insured status and risk transfer

Contractual risk transfer generally uses two mechanisms together: an indemnity from the counterparty, and status as an additional insured on its liability policy. They fail in different ways, which is why both are used.

Additional insured endorsements vary substantially. Blanket endorsements cover parties the named insured has agreed in writing to add; scheduled ones list them. Coverage may be limited to liability caused in whole or in part by the named insured’s acts, which excludes claims arising from the additional insured’s sole negligence.

Primary and non-contributory wording is essential; without it, the additional insured’s own insurer may share the loss and then seek contribution.

Ongoing versus completed operations. Construction contracts require both, or coverage ends when the work does — precisely when defect claims begin.

Waiver of subrogation prevents the insurer paying a loss from pursuing the other contracting party.

Verification. A certificate of insurance is not a policy and confers no rights; it is evidence only. Request the endorsement itself for material relationships.

Anti-indemnity statutes in many states void broad indemnities in construction contracts, and some restrict additional insured requirements as well, which makes state law the starting point for drafting these provisions.