A general contractor was added to a general liability policy that covered a sub-contractor it hired to perform roofing work for a theater that was part of a theater and mall complex. The roof developed serious leaks and the general contractor was obligated to redo the work. The general contractor sued the sub's insurer when its attempt to recover the cost of the repair work was denied. A lower court found in favor of the general contractor and the sub-contractor's insurer appealed that expensive decision.

Click here to see how the higher court viewed a finding that the general contractor, as an additional insured, was protected against its sub-contractor's faulty work.

Regardless the type of coverage, an insurance policy's opening language devotes space to explain what entities qualify under it as a covered party. In other words, they explain who are insureds. The entire point of purchasing insurance is to be able to rely on protection, so it's important that both insurers and policyholders are clear on who is covered. Policy definition sections are usually where covered parties are described.

Click here for an excerpt of wording on covered acts found in the AAIS Commercial Liability Coverage Form Analysis found in PF&M.

There are instances in which other entities may be added to a base insurance policy. This is done, typically, by endorsing parties. Generally added parties are covered on the same basis under a given, amended policy. Such additions are often made because the party has a relationship with the defined insureds. Under property policies, the relationship usually involves some form of ownership interest in covered property. Under liability policies, the relationship usually involves some form of contractual or vicarious responsibility.

Click here for an excerpt of descriptions of various additional insured endorsements from the ISO Commercial General Liability Available Endorsements article found in PF&M.

Being contracts, insurance policies always have other provisions that can affect the eligibility of losses. Additional insured status can expand the entities that may be covered. However, added parties typically are not covered on the same basis as other insureds. In fact, such parties are typically added in order to formally and more fully address coverage parameters for the parties named under a policy rather than expand coverage. Insurance is designed to deliver focused coverage. Different parties and different operations are meant to find their own sources of protection. That can be the case for situations involving completed products or work.

Click here to see an excerpt of a discussion on the Products-Completed Operations Hazard from P&C Insurance by Gordis in Advantage Plus.