Two Terms That Confuse Every Contractor
You are about to start a commercial job. The GC sends over their insurance requirements. They want to be listed as an "additional insured" on your general liability policy. You have seen this a hundred times, but do you actually know what it means? And how is it different from being the "named insured" on your own policy?
Getting these two terms confused can leave one party without coverage when a claim happens. Here is exactly what each means.
Named Insured
The named insured is the business or person who purchased the policy. That is you. Your company name appears on the declarations page of the policy. You are entitled to full coverage under all policy terms including:
- Defense costs for any covered claim
- Indemnity payments for settlements or judgments
- The right to file claims
- The right to modify or cancel the policy
- Coverage for completed operations
- Coverage for products liability
As the named insured, you control the policy. You can change limits, add endorsements, and decide whether to renew.
Additional Insured
An additional insured is a third party added to your policy through an endorsement. They receive limited coverage for claims arising from your work. The most common example is a general contractor requiring every sub to add them as an additional insured.
What additional insured status provides:
- Coverage for claims arising out of the named insured's work
- Defense costs if they are named in a lawsuit related to your operations
- Protection against vicarious liability (being blamed for your mistake)
What it does not provide:
- Coverage for the additional insured's own negligence
- Coverage for their operations unrelated to your work
- The right to modify or cancel the policy
- Completed operations coverage (unless specifically endorsed)
Why General Contractors Require It
A GC manages the entire project. If a subcontractor's employee drops a tool and injures a pedestrian, the injured party will sue everyone: the sub, the GC, the property owner, and anyone else they can name. The GC wants additional insured status on your policy so your insurance responds first and covers the GC's defense costs.
Without it, the GC has to rely solely on their own insurance, which drives up their claims history and premiums. By being listed as additional insured on every sub's policy, the GC ensures that claims flow to the responsible party's carrier.
The Endorsement Forms That Matter
Not all additional insured endorsements are equal. The two most common ISO forms are:
CG 20 10 covers the additional insured for ongoing operations only. Once you finish your work and leave the site, coverage for the additional insured ends.
CG 20 37 covers the additional insured for completed operations. If your work causes damage after you leave the job, the additional insured still has coverage under your policy.
Most commercial contracts require both CG 20 10 and CG 20 37 or a combined form like CG 20 33.
Waiver of Subrogation
You will often see "waiver of subrogation" required alongside additional insured. This prevents your insurance carrier from suing the additional insured to recover money they paid on a claim. Without this waiver, your carrier could pay a claim and then turn around and sue the GC to get their money back.
Certificate Holder vs Additional Insured
One more distinction that causes confusion. A certificate holder is simply the party who receives a copy of your certificate of insurance. It is a notification role only. Being listed as a certificate holder gives them zero coverage under your policy.
An additional insured actually receives coverage. If someone asks to be a certificate holder, that is easy and free. If they ask to be an additional insured, your carrier needs to endorse the policy.
How to Handle Additional Insured Requests
When a GC sends over their insurance requirements:
- Forward the requirements to your agent immediately
- Your agent confirms your policy supports the requested endorsements
- The carrier adds the additional insured endorsement (usually same day)
- A certificate is issued showing the GC as additional insured
- The certificate is sent directly to the GC
We handle this process every day. Call (949) 200-7171 and we will have the endorsement and certificate ready within hours.