You have collected a certificate of insurance from your tenant or vendor, but are you listed as an additional insured on the correct endorsement? The only way to confirm your company is protected is if you and your tenants/vendors have the correct policies and endorsements in place. A certificate of insurance listing additional insured status is not enough.
Within the real estate and property management realm most owners and managers have a standard practice for obtaining an additional insured status under other parties’ liability policies. It is common to require the additional insured coverage to extend to completed operations. The goal of this practice is to protect the management and owners from losses that occur during the course of construction, as well as claims arising out of the completed project (damages found after the project is completed).
But, what does this really mean?
Often times, damage resulting from construction work isn’t apparent for years after the work has been completed. When that claim occurs, a suit is often filed against both the ownership and property management as well as the contractor, the general contractor will tender the defense back to their subcontractor.
Assuming the loss is a covered loss and filed in a timely manner, the coverage afforded the ownership by the subcontractor is dependent upon the additional insured endorsement issued. If that subcontractor has the appropriate parties listed as an additional insured for their “ongoing operations” only, the property owners and managers will have no coverage under the subcontractor’s policy. However, if the subcontractor has them listed as an additional insured for their completed operations or “your work,” the property management may have coverage under the subcontractor’s policy.
Don’t wait until a completed operations claim to determine if there are gaps in coverage. Property management and ownership must protect themselves by reviewing the terms of their contracts, checking their commercial general liability (CGL) policies and endorsements. Especially determine if adequate coverage limits and acceptable coverage for completed operations is in place, consider all of these items as part of an overall risk management plan.
myCOI provides cost effective solutions for every size company to assist with tracking and managing the additional insured status on your certificates of insurance. Contact us today for a demo.