CG 20 10. It is a replicated story. A story traded through the decades that is more common than most. Here it goes:
A contractor is offered a lucrative job, but needs a certificate of insurance to complete it. He shops and shops seeking to find the best offer of insurance without breaking the bank. Jackpot, he nails it! He buys the coverage, receives the correct documentation, and takes it to the client. The client resends the offer because the insurance is inadequate. His contract necessitates CG 20 10, an additional insured endorsement that his current policy does not offer. The end to this story is a costly one. The contractor has to purchase another policy. This means coming up with another down payment.
Whether you run a large or small company, you want what best fits your needs. As a professional contractor, you deserve the best protection at a reasonable cost. Failure to get the right endorsement can hold up a job and prevent payment on work that the contractor has already completed. Let’s take a closer look at CG 20 10 and see how this endorsement actually works.
What is CG 20 10?
CG 20 10 affords additional insured status on your policy to the recipient. The edition date establishes how much protection you can afford to the additional insured. It provides coverage under an endorsement for the insured and falls under negligence.
The named insured is critical. The 11/85 of CG 20 10 is an extended coverage. The 11/85 represents the month of November and the year 1985. This is the first edition added to ease tension between contractors, insurance professionals and lawyers. Most contractors are smart enough to choose the correct form, but they must also make sure that it contains the proper language. You need the primary language because without it, the primary insured and all additional insureds will contribute equally. General contractors can protect their own policy limits by endorsing their coverage providing that the addition is primary.
I attended a seminar about 6 months ago designed for agents that intend to sell insurance for contractors and it was an eye opener. The instructor said that the underwriting process should be examined, and to make sure that each contractor is requesting some form of CG 20 10, whether the company offers it or not. He stated that if we see the request tean we can make sure that the primary language is correct and then issue the endorsement. The 11/85 offers a ten year window left open so that alleged construction defections suits can be filed if needed. So even after the work is completed there is still coverage for up to ten years.
CG 20 10 03/97
Another form of CG 20 10 is 03/97. This endorsement was established in March of 1997. It provides coverage for ongoing operations only. After the job is completed, the coverage ends. This may not be acceptable for some clients, so contractors may use a blanket additional insured. This can be manuscripted to clarify exact risk by requiring a certificate of insurance, this is to say in writing that another party is the additional insured. Remember, the language is especially important to a subcontractor policy. They prefer that the coverage is primary to the general contractor. Underwriters will sometimes want to know or even control to whom the additional insured is granted. Remember you must schedule the entity requiring additional insurance. If forgotten, this will create a problem with the certificate of insurance being issued stating that the additional insured status is provided for both operations and completed operations. Unless the underwriter agrees to allow the entity to be scheduled, it will be a misrepresentation of policy provisions. In most cases, this will not happen because most general contractors are smart enough to endorse the correct form of CG 20 10. The endorsement changes the policy to include the additional insured shown in the schedule, but only with respect to liability for bodily injury, property damage, personal injury caused by your on acts or omissions and those acting on your behalf in the performance of ongoing operations.
CG 20 10 07/04
This edition was done through the courts. The coverage extension unintentionally extended more coverage to the additional insured and less to the insured. This affected the limits for the coverage to the insured. If the acts or omissions of acts are on your behalf, in the performance of ongoing operations for the additional insured is at the location designated. This includes products completed, operations and hazards.
CG 20 10 04/13
This coverage only applies to the extent of coverage provided by law. If coverage to the additional insured is required by your client is greater, it will not be broader than that which is required by law or available to insurance limits in the declarations.
A lot has changed since November 1985. The ISO has announced several changes to the endorsement language. The reason was to never pay under CG 20 10 11/85 for the additional insured sole negligence. Currently, there are many proprietary endorsements and they also restrict coverage for the sole negligence issue. Contractors should review the chart stated as commonly used endorsements.
Lastly, it is important to understand that although a certificate of insurance may identify a particular person as a cert holder, it is not the same thing as an additional insured. Moreover, it is only information and gives no actual rights to the cert holder. Certificates provide evidence of insurance policies and the date issued. They do not guarantee the limits will not be exhausted by claims. The endorsements must be attached to the policy as required. Futhermore, the certificate clearly states that if the cert holder is an additional insured, the policy still must be endorsed accordingly. This means the additional insured will know exactly what coverage is provided. There is a difference between insured and additional insured because the application of endorsements apply solely to the named insured. The general contractor enjoys the benefit of insurance protection from another policy with the added endorsement of CG 20 10 and can rest easy!