Insureds - Are They Worth The Money?
where there are contracts (venue leases, sponsorship agreements,
etc.) requiring one party or another to be added as an additional
insured to your policy are considered common and effective
methods for that party to protect itself from the liabilities
created by your actions. You’re the one “in the
spotlight” and most likely to create the claim. Therefore,
it appears reasonable that you should bear the primary responsibility
for avoiding such liabilities – or, in the event those
efforts fail, to be the primary provider of defense and insurance
coverage for the claims. But although such provisions may
be common, whether they are also effective
is another matter.
make certain the contract language requirements are going
to be met, at least in part, by your insurance coverage, now
is the time to talk to us and review responsibilities. We'll
want to see a copy of your contracts and venue rental agreements
to see what liability you are assuming. You'll also want your
legal advisor to review all contracts before they
often gaps in coverage are discovered only after the event
is over and a claim is filed. At that point it's too late
to discover you’ve agreed by contract to something that
is either uninsurable – or, even more depressing - was
easily insurable if only you had told us about it. It’s
better to know prior to risking your hard-earned assets.
attorneys can also help you draft appropriate language to
utilize in your own requests to others to be added as an additional
insured under their policies. After all, successfully getting
the other party to take on the broadest possible responsibilities
to protect you is a prudent risk management strategy. But
if the protection is needed and neither they nor their insurance
carrier are capable of responding, all of that liability falls
right back in your lap. Talk with your legal advisers. Then
are our 3 rules for prudent additional insured risk management:
Make sure you list everyone you are contractually required
As stated above, you will have a gap in coverage if you fail
to do this.
you sign a title sponsor agreement with "Great Beer"
that requires you to name Great Beer as additional insured
and hold them harmless from all claims - not an uncommon scenario.
You fail to do this and someone is injured at your event.
Obviously, because Great Beer's name was plastered everywhere,
they are also named in the lawsuit, even though they had no
involvement in the claim. Now Great Beer is looking to you
to hire attorneys for them and defend them in court. You turn
around and look to your insurance company for protection.
But because Great Beer was not an additional insured on your
policy, that protection is not forthcoming and you'll probably
have to foot Great Beer's legal bill yourself. (This example
is oversimplification of a complex issue and if your policy
has contractual liability coverage, you may or may not have
to come out of pocket initially for their legal bill. But
the moral of the story is clear; read your contracts and comply
with all requirements.)
Don't list anyone unless contractually required.
The more people you have named on your policy, the more people
you have to share your policy limit with in case of a claim!
Think about it. You might think you are being a good guy by
listing any and everyone on your policy, but you risk financial
suicide. Your policy limit is per occurrence, not
per additional insured. In a worst case scenario
you could easily find yourself with an inadequate policy limit
simply because you listed someone you did not have to list
and they are using some of your policy limit that you desperately
need. In this scenario, you would have to come out-of-pocket
for any judgment/settlement amount over your share of the
Make sure you get named as Additional Insured every
chance you get.
every single situation where you have sub-contractors or where
you have contract negotiating power with others, make certain
there is wording requiring the other party to name you as
additional insured and to hold you harmless. And make certain
you obtain a certificate of insurance from them showing that
you have indeed been named as additional insured on their
policy. We'll be happy to review these certificates to make
certain they are adequate.
a minimum, anyone you name as additional insured on your policy
should also name you as additional insured on their policy.
This may not be possible when dealing with the site/venue,
but should apply to everyone else.