ISO amended the 2013 form CG 20 38. This form is used to add a blanket additional insured to a policy. New terms limit coverage:
(T)he insurance afforded to such additional insured described above…Only applies to the extent permitted by law…. (Emphasis added).
What does this mean? The committee added these terms to incorporate laws recently enacted in certain states that limit indemnity or prohibit it altogether between parties. Despite these laws, courts have found additional insured endorsements in certain insurance policies to be worded so broadly that they cover such indemnity, even if prohibited by statute.
We all know that it is a common practice in construction for an owner and general contractor to require a subcontractor to name the owner and general contractor as additional insureds under the sub’s CGL policy. Once an additional insured endorsement is in place, insurance coverage is not limited to what the insurer owes for the subcontractor’s contractual liability under their indemnity agreement. Nor is it limited by statutes that prohibit such risk transference.
The new 2013 amendments seek to abide by the state laws. By adding this new language, the ISO is attempting to narrow the coverage for additional insureds.
THE BOTTOM LINE: If you are a subcontractor, you will want this form used. If you are an owner or general contractor, you will prefer the older version of CG 20 38.