This language was included in the bidding requirements from a railroad, though it was never reviewed by the insurance agent or underwriter:

“It is agreed that the policy or policies of insurance evidenced by this certificate covers the liability assumed by the insured in connection with work pursuant to the Agreement dated December 27, 2018 by and between the City of _____ & _____ Railroad, including work upon railroad property, within railroad right of way and in close proximity to operating railroad tracks.”

The construction contract with the general contractor who won the $24M contract required that the above language be added to the contractor’s CGL policy.

Of course, the insurer refused to manuscript any such language. Aside from any regulatory restraints on manuscripting endorsements to filed forms by admitted carriers, what is problematic is the assertion that the insurance policy “COVERS the liability assumed by the insured….”

For this statement to be true, the CGL policy would have to have a remarkably broad insuring agreement, NO exclusions, and NO limits. Many, if not most, contractual indemnity agreements are without limit or cause and are uninsurable.

This illustrates the importance of qualified personnel carefully reviewing contracts prior to the bidding process to ensure that all insurance requirements can be met. Otherwise, winning bidders may find themselves immediately in breach of contract.

Photo by Alexandre Prévot

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Bill Wilson

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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