Contract documents

January 11, 2023

One of the best ways to manage risk on construction projects is through insurance and bonds. Throughout the next several weeks, the AIA Contract Documents Program is going to release a series of articles pertaining to construction insurance. This is Part 6: Additional Insureds.

Additional Insureds

All parties to a construction contract obtain insurance through their own insurance carriers. In some instances, however, each party will add another party (or parties) to their insurance policies as “additional insureds.” The designation as an additional insured brings with it several attributes.

First, “additional insured coverage is intended to cover the vicarious liability of the additional insured arising out of the operations of the named insured.”[1] Stated differently, if the negligence of the named insured (say, the contractor) could lead to liability for another party (say, the owner), then the owner is covered by being named as an additional insured on the contractor’s insurance policy.

Second, as a general rule, an insurance company cannot sue its own insured for things like reimbursement of claims payments. Being added as an additional insured gives this layer of protection to the party added as an additional insured, such that they cannot be sued by the insured’s liability carrier.

The effects of additional insured status are somewhat similar to those from a waiver of subrogation, which was discussed in Part 4: Waivers of Subrogation. Of course, there are many more aspects to additional insured status, but those listed above are some of the more critical ones.

Do AIA Contracts Contain Insurance Requirements Related to Additional Insureds?

Yes. There are additional insured requirements for the property insurance and commercial general liability coverages in the Insurance and Bonds Exhibit (Exhibit A) to A101-2017:

• A.3.1.3 Additional Insured Obligations. To the fullest extent permitted by law, the Contractor shall cause the commercial general liability coverage to include (1) the Owner, the Architect, and the Architect’s consultants as additional insureds for claims caused in whole or in part by the Contractor’s negligent acts or omissions during the Contractor’s operations; and (2) the Owner as an additional insured for claims caused in whole or in part by the Contractor’s negligent acts or omissions for which loss occurs during completed operations. The additional insured coverage shall be primary and non-contributory to any of the Owner’s general liability insurance policies and shall apply to both ongoing and completed operations. To the extent commercially available, the additional insured coverage shall be no less than that provided by Insurance Services Office, Inc. (ISO) forms CG 20 10 07 04, CG 20 37 07 04, and, with respect to the Architect and the Architect’s consultants, CG 20 32 07 04.

Stay tuned for Part 7!

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.  

[1] Scope of additional insured coverage—Narrow view, 4Pt2 Bruner & O’Connor Construction Law § 11:330.