I recently had an email exchange with Missouri agent Tim Wahl, CIC. Tim advised:

“I’ve been researching and I’ve found that many, many, many automatic AI endorsements that come on various bops and packages do NOT grant AI status on a primary basis. This really becomes a problem when adding a landlord  and other entities that want primary AI status.”

My experience for over 10 years is that SOME additional insured endorsements provide only excess coverage, not primary and noncontributory coverage. Since most contracts today, especially in the construction industry, require primary coverage, providing an AI endorsement with only excess coverage likely places the customer in breach of contract and, as a result, can cause significant penalties to be assessed (e.g., not getting paid for work). ISO AI endorsements are silent on the primary vs. excess issue…ISO uses a separate CG 20 01 endorsement in an attempt to establish primary and noncontributory coverage for AIs.

My experience for over 10 years is that MANY additional insured endorsements cover only vicarious liability and not the direct liability required by most contracts. One problem with such endorsements is that this may not be  readily evident. For example, here are excerpts from four different AI endorsements:

  • Coverage is provided “…only to the extent that ‘additional insured’ is being held responsible for the acts, omissions and/or negligence of the ‘named insured’.”
  • “The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.”
  • “The coverage afforded hereunder is limited to imputed liability resulting solely from the conduct of the named insured for which the additional insured is held responsible and liable.”
  • “The coverage afforded to the additional insured is limited solely to the additional insured’s ‘vicarious liability’ that is a specific and direct result of your conduct.”

Each of the provisions above effectively limit coverage to vicarious liability, yet only one of them actually uses the term “vicarious liability.”

Many non-ISO AI endorsements are riddled with provisions that make them inferior to ISO forms and these provisions are not always (or even often) readily apparently. This is another reason why making a statement on a certificate of insurance that someone IS an additional insured in accordance with a contract is exceedingly dangerous.

Processing certificate of insurance and AI requests is not the clerical function it was many years ago. Do your staff members KNOW the limitations that might be in your carriers’ forms?


Note:  On May 30, the legendary Chris Amrhein and I will be presenting a webinar called “Finding and Fixing Commercial Lines Coverage Gaps.” We will be addressing dozens of issues like this involving ISO and non-ISO policy forms. If you would like information on how to register, shoot me an email.



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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