Congratulations you just got a job! However the client is asking you to provide them with a CG 20 10 Endorsement before they will let you start working. Do not panic if you currently have general liability insurance you should already have this coverage. As the most common additional insured endorsement for contractors is the CG 20 10.
In plain English a CG 20 10 is proof of insurance. It names your customer as an additional insured on your commercial general liability (CGL) policies. Your client by requiring you to provide this form has the expectation that the additional insured endorsement will defend them in case they get sued for something relating to your work. There is also another important reason a Prime contractor will require you to produce this form. It has to do with their CGL policy.
Almost all CGL policies are audited at the end of the policy term. During this audit the insurance company will require the contractor to show proof that any subcontractors that were paid had insurance. They do this by having the contractor produce the ACORD Form showing that the sub contractor listed them as an additional insured. If they can not provide this proof the amount paid to that subcontractor will be treated as an uninsured subcontractor.
This will cause their CGL insurance premium to increase. This is something to keep in mind for your own business as well. If you hire subcontractors you will also want to get certificates of insurance naming you as an additional insured. It is a best practice to collect these forms before you let any work be preformed. It is often difficult to track down people at a later date. If you are not able to track them down expect a bill from your insurance company.
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Changes to CG 20 10 After 1985
The CG 20 10 changed significantly in the 1985 edition. Before the November 1985 edition, called the CG 20 10 11 85. The party being added as an additional insured was an insured “with respect to liability arising out of ‘your work.” “Your work” refers to the work of the named contractor. “Your work” includes your ongoing operations and completed operations. After 1985, the party being added as an additional insured using the CG 20 10 was only an insured with respect to liability caused by your ongoing operations.
The important distinction is that ongoing operations does not include completed operations. Therefore, the change from “your work” in the CG 20 10 11 85 to “ongoing operations” in later versions effectively removed completed operations coverage for the additional insured.
What Do Changes to the CG 20 11 Actually Mean In The Real World?
To understand the consequence of this change, imagine a property owner hiring a contractor to install a roof. During the installation of the roof, the contractor drops a load of shingles on top of a car. This causes property damage arising out of the contractor’s ongoing operations. The car owners sue the property owner.
If the property owner was named as an additional insured on the contractor’s CGL policy using CG 20 10 11 85, the property owner would be covered.
The CG 20 10 11 85 provides coverage for liability arising out of contractors work, and “your work” includes both the named insured’s ongoing and completed operations. If the property owner was named as an additional insured using the CG 20 10 after 1985, the property owner would also be covered as an additional insured on the contractor’s policy because the CG 20 10 after 1985 provides coverage for ongoing operations, and this was an ongoing operations exposure.
Now let us say 3 months after the contractor finishes the roof, the roof blows off because it was not properly installed and damages some cars. This is property damage arose from the contractor’s completed operations. Once again, the car owners sue the property owner.
If the property owner was named as an additional insured using the CG 20 10 11 85, the property owner would have coverage for the completed operations exposure as “your work.” If the property owner was named as an additional insured using the CG 20 10 with an edition date after 1985, the property owner would not have coverage for the completed operations exposure under the contractor’s CGL policy.
The CG 20 10 after 1985 does not provide coverage to the additional insured for completed operations. It only provides coverage for ongoing operations, and this was a completed operations exposure.
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