Handling certificates of insurance requests on behalf of landlords can be tricky. This agent who also provides risk management services asked our experts for the best ways to respond to and manage these requests, particularly those that cover renovations or tenant build outs.  

Q. I consult on risk management for many landlords. Before tenants move into a space, a buildout occurs. Tenants send me their general contractor’s COI for evaluation. The Lease requires tenants and their contractors to add the landlord as additional insured with waiver of subrogation & primary noncontributory.  

Most general contractors’ (GC) and subs’ certificate of insurance states: … XYZ are included as additional insured as required by written contract …, but rarely is there a written contract between the GC, the subs, and Landlord. If the tenant hires a sub, we rarely receive those COIs.  

Virtually everyone, the landlord, tenant, and GC mistakenly believe the contractor’s additional insured endorsements are triggered by the lease agreement between the landlord and tenant.  

Typically, the COI arrives after the job is complete, if ever. How do I combat this never-ending cycle with the contractors and protect the landlords?  

Use an additional insured endorsement (for example, CG 20 38) that does not require a contract between the landlord and the contractor for the tenant.  

================================================================== 

You already know the first part of the answer: It's a lawyer question." But with that in mind, it would seem the best you could hope for is access to the GC's coverage. If your lease contains a requirement that contractors add the landlord as an additional insured, that would seem to clear the "required by written contract" hurdle. The lease could also include a requirement that all sub-contractors do likewise, but since that relationship--contractor to sub-contractor--is beyond your control, it is probably impossible to enforce. Moreover, since the sub- doesn't have a written contract with the landlord, there can't be any automatic coverage from the sub- to the landlord. As with all of the additional insured situations, there are many ways for this device to fail and your client needs to have their own coverage with adequate limits, just in case. And if there's a snowball's chance of this device working, it doesn't extend much farther than the GC. 

================================================================== 

If I understand the question correctly, the Upstream Additional Insured (AI) endorsement is the solution. It specifies that, as long as there is a continuous "stream" of written and appropriately signed contracts, the landlord is covered by being named on the GC's or main contractor's policy. 

================================================================== 

You can’t protect clients who are unwilling to help protect themselves. Perhaps you should give up that part of your practice for clients who don’t use properly drafted contracts with proper provisions. All you can tell those clients is the certificates are an illusion of coverage that does not apply to them. For certain coverages to apply, they must be triggered by properly drafted contract requisites. Absent proper contracts it’s a crapshoot and they are kidding themselves. 

For my clients who are concerned about risk and potential exposure to loss, we include proper defense, indemnity and hold harmless provisions, exculpatory provisions and an insurance addendum that details the requisites. That would include – but not be limited to - waiver of subrogation, primary and noncontributory, and additional insured with the specific ISO form numbers to fit the situation – whether in privity of contract or an interested third-party beneficiary. In some instances, we give options of combinations of ISO forms that are acceptable and add or comparable forms providing equivalent coverage. Coverage requisites are clearly detailed to fit the situation. 

Some of my clients listen, learn, and engage in the process, and some don’t. To those who do not, I tell them if nothing happens – then no issue. If something goes wrong it could become a time-consuming, expensive, painful litigation nightmare. And I remind them, not everything matters. Some things matter and some things do not. Most things do not matter until they matter – and then it is often too late to deal with what mattered. 

================================================================== 

The tenants should add CG 20 11 Additional Insured – Managers or Lessors of Premises. The contractors should add CG 20 10 Additional Insured – Owners, Lessees or Contractors – Scheduled Person or Organization and CG 20 37 Additional Insured – Owners, Lessees or Contractors – Completed Operations (if completed operations coverage is required). None of these endorsements require a written contract.  

================================================================= 

You have fulfilled your obligation by “Requesting” the COI from the various entities concerning your landlord client. This is, as you are aware, more to control additional premium at an audit for your client. The other issue is this will only become readily available upon the notice of a potential claim.  

Just document your file with a notation to your client. 

================================================================== 

Take a look at the ISO Forms described below that solve the problem 

================================================================== 

Regardless of what the COI says, it is important that your landlords get a copy of the AI endorsement that is purporting to provide coverage. A statement on the COI means nothing without the policy language to support it. Allowing work to begin before a COI and endorsement are received is dangerous. As tedious as this is for the landlords, it is the only way to make sure they are protected.  

If there is a contract between the tenant and the general contractor (GC) and/or the GC and the subs that requires AI coverage for the landlord, some AI endorsements (e.g., CG 20 38 12 19) are broad enough. In many cases, though, the landlord will need to be named on an AI endorsement such as CG 20 26 12 19 on each contractor's policy - either because there is no contract that requires they get AI status or because the automatic AI endorsement is not broad enough to include them.

_____________________________________________________________________________________________________________________________________