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ADDITIONAL INSURED PROVISIONS IN CONSTRUCTION CONTRACTS

When a general contractor requires a subcontractor to obtain insurance for the subcontractor's work under a construction contract, the general contractor often requires the subcontractor to include the general contractor as an additional insured under the subcontractor's insurance policy. Similarly, when an owner requires a general contractor to obtain insurance for his or her work, the owner may also require the general contractor to include the owner as an additional insured under the general contractor's insurance policy.

Some courts have interpreted additional insured provisions to only cover liability that is imputed to an additional insured by the acts or omissions of an insured party or its employees. Most courts interpret the provisions to include liability that arises from the acts of the additional insured, which acts may include the additional insured's supervision of the insured party's work.

Fault on the part of an insured party or on the part of persons performing work on behalf of the insured party does not trigger coverage under an additional insured provision in an insurance contract. If fault is required to trigger coverage, the provision must specifically state that fact.

An insurance company has a duty to defend its insured if the insured is sued for a claim that is covered by an insurance policy. This duty to defend also includes an additional insured under the policy.

Even if a general contractor requires a subcontractor to name the general contractor as an additional insured under the subcontractor's general liability policy, the general contractor may not be fully covered by the subcontractor's policy. Both the general contractor's general liability policy and the subcontractor's general liability policy must be examined. Most general liability policies have provisions regarding "other insurance." Most general liability policies state that they are primary insurance policies. If "other insurance" is available, the general liability insurer will only be responsible for its pro rata share of the liability. If the general contractor wants to obtain maximum coverage, he or she should obtain a general liability insurance policy that does not contain a provision regarding "other insurance."