A recent strategy of risk transfer being used by legal and risk professionals for their business clients is requesting older versions of the CG 2010 Additional insured endorsements from their subcontractors or vendors. There is a big reason for this. Prior to 2004 the CG2010 Additional insured endorsement provided coverage for the additional insureds' liability "arising out of" the operations performed for the named insured.* In some courts this included the Sole Negligence of the Additional Insured. After 2004, Insurance Service Office, who writes the additional insured forms, changed the wording from "arising out of" to "caused in whole or in part". This change was done to no longer have primary insured's cover the sole negligence of additional insureds.
However with the complexity of today's contracts, many businesses are signing unaware they are covering others sole negligence. Having their insurance company use older Additional Insured forms only makes this more complicated. The other issue to consider is the anti-indemnity laws. Many states have created laws that prevent parties being liable for others sole negligence. I guess as claims and cases arise, it will remain to be seen how the courts interpret old insurance language against the modern anti-indemnity laws. Stay tuned on this one.
Until next time be careful out there and know your risks.
Post by: G. Kevin Nemith President CNC Insurance/ Pfister Insurance, members of Hilb Group Mid-Atlantic.
knemith@hilbgroup.com
*from IRMI Expert Commentary 2016
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