Recently I was contacted by an agent whose insured was participating in a festival. The contract required a certificate of insurance evidencing that the following were additional insureds under the insured’s CGL policy:
- Tradeshow Company LLC and their direct and indirect parents and subsidiaries, any of their affiliated entities, successors and assigns and any current or future director, officer, employee, partner, member or agent of any of them.
- Large Metropolitan City and their direct and indirect parents and subsidiaries, any of their affiliated entities, successors and assigns and any current or future director, officer, employee, partner, member or agent of any of them.
- Giant Holding Company, LLC and their direct and indirect parents and subsidiaries, any of their affiliated entities, successors and assigns and any current or future director, officer, employee, partner, member or agent of any of them.
This reminded me of a COI/AI request I saw several years ago:
“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.”
The insured in the latter instance was a guy with a hot dog cart. They wanted him to name the organizer and essentially everyone else in the state of North Carolina as additional insureds. Talk about dilution of limits and dramatically increasing the potential for getting the carrier involved in a lawsuit against one of essentially hundreds of thousands of AIs.
Yes, this is not uncommon. It’s a ridiculous request, but there is no downside to the immediate upstream party for making the request and, no doubt, their contract requires it. While most AI endorsements today require some liability on the part of the named insured, all that’s required to trigger a defense of potentially countless entities is a lawsuit alleging such liability on the part of the named insured.
In addition, from the standpoint of contractual liability under most CGL policies, the existence of this contract can also trigger coverage for claims involving the contractual assumption of liability where defense is within limits, thus rapidly exhausting policy limits for the named insured.
Of course, it could be worse, like the request to name as an additional insured “The United States of America.”
It’s unfortunate that someone can’t sell hot dogs without giving away insurance coverage.
Photo by Tony Fischer Photography 
Bill Wilson
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I have been retired a few years and I look like the gentleman with the umbrella and cart. If my wife sees that picture I will be on the street with a cart within twenty-four hours. I fought the battle over onerous request on certificates of insurance for forty years. Many insureds do not understand what is being requested of them. When you try and explain some of the adverse consequences of the request they are facing they tell you that YOU are against them and do not want them to get the job. However, some insureds recognize the perils that could befall them and say no to the request. I always laugh when the request still references the “comprehensive general liability policy”. That shows you how out of date the request has become.
But they have you by the throat. No additional insured = no work. And the further down the contractual chain the worse it is. It’s an invite for those mandating the coverage not to do their job safely or provide a safe work environment. Some might say that’s not true. In my experience most claims seldom go to court as it’s too costly. Or, there is a fear of court because of jury verdicts. So it is true.
The entire system requires an over haul. Right is right and wrong us wrong. If wrong you should be held accountable. With additional insured status those wrong will most likely not be held accountable.
I reviewed insurance requirements for a small 3-person contracting operation. I think they were sheetrock hangers. The requirement were ridiculous in the coverages and form modifications that were expected. The contractor was insured by an office of a very large national agency/brokerage and they refused to comply. As it turns out, the insurance requirements were drafted by one of their own offices.
Should the additional insured clause be required for liability due to acts & omissions of rhe original insured, I don’t see any problem, since it comes to defend the Co’s or organisation issuing the permits.
It should not include the direct liability of the organisation requesting the COI’s
Not sure I follow the question. Most AI endorsements today, specifically the ISO forms, require some liability on the part of the insured before coverage for the AI is triggered.