Construction contracts often require subcontractors and sub-subcontractors to name upstream contractors as additional insureds on their policy. I often wonder whether the upstream contractor ever reviews its subcontractors’ insurance policies to find out the specifics on when claims must be made, the limits applicable to the project, and the exclusions.
If you are an upstream contractor and you are named as an additional insured on your subcontractor’s insurance, here are some things to consider:
- Policy. Have you actually seen it?
- Insurer. Is the insurer reputable or rated?
- Notice of Occurrence. When should the subcontractor provide notice of an occurrence to the insurer?
- Exclusions. What are the exclusions under the subcontractor’s policy?
- Extensions. Have you asked for certain extensions, such as completed works, and are they attached to the policy?
- Effective Dates. When does the policy expire?
- Limits of Liability. Are the limits consistent with the contract requirements?
- Primary versus secondary coverage. Is there a clause that makes sure your subcontractor’s insurance is primary and yours is secondary?
Just because you are named as an additional insured, does not mean you are home free. You’ll need to review your subcontractor’s insurance policy and these are just a few of the provision that you should be looking for.