If you work in commercial lines, you’ve seen these…requests for additional insured (AI) status where the list of additional insureds is longer than the AI endorsements used to add them. For example:

“XYZ Catering, Inc. (d/b/a XYZ Creations), ABC Sports & Entertainment LLC, ABC Holdings LP, the DEF Center, their respective principals, members, officials, officers, directors, shareholders, employees, and agents, their respective parent and affiliate companies and their respective Successors or Assigns as now or hereafter may be constituted and the Centennial Authority, the City of Raleigh, North Carolina, the State of North Carolina and their departments, divisions, commissions, and boards and their respective principals, members, officials, officers, directors, shareholders, employees, and agents have been named as additionally insured’s [sic] under said policy with respect to any legal liability arising out of the Licensee’s performance hereunder.”

In the example above, the requestor that this language appear on the certificate of insurance was a venue hosting an event where the vendor who was required to name all of these entities as AIs was a guy pushing a hot dog cart.

A similar request was made a few months ago by a tenant wanting to be an AI on a landlord’s CGL policy. While it’s more common for a landlord to insist on being an AI on a tenant’s CGL policy, a tenant with more clout or a better bargaining position may insist on being an AI on the landlord’s CGL policy. This was the case in a claim that was brought to my attention where the tenant wanted itself and a laundry list of others, including employees, added as AIs on the landlord’s CGL policy.

The claim consisted of a lawsuit by a customer of the tenant who was run over in the parking lot by an employee of the tenant. The landlord was being sued allegedly for an obstruction that that contributed to the accident. The landlord had no auto insurance of his own, only a CGL policy. The landlord’s CGL policy included this ‘auto’ exclusion, identical in language to the ISO CGL policy:

This insurance does not apply to “bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured.”

If the exclusion is read solely from the standpoint of the landlord as the insured, the auto in the accident was not “owned or operated by” or “rented or loaned to” the insured (landlord), so there would be coverage for the landlord under his CGL policy. However, the tenant’s employee had been added as an AI on the landlord’s CGL policy, so the auto was “owned or operated by” ‘ANY insured,’ thus triggering the exclusion for all insureds under the landlord’s CGL policy.

In this scenario, by adding the tenant’s employees as AIs, the landlord removed coverage for himself under his own CGL policy for auto exposures involving “any insured” (including AIs), something probably not contemplated by anyone when the AI coverage was effected. The term “any insured” appears 25 times in the current ISO CGL policy.

Understanding insurance policy language can be difficult. When you consider such language in the context of claim scenarios, understanding the implications of coverage (or lack thereof) can be even more difficult.

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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