The Insurance Services Office (ISO) recently made changes to 24 additional insured endorsements, restricting coverage in some instances for additional insured entities.

To ensure your organization will be covered by vendors' insurance policies, it is necessary to closely read and scrutinize the additional insured endorsement forms associated with vendor's policies.

The first change to the additional insured endorsement states that coverage is only available "to the extent permitted by law." In states which prohibit indemnification for a party's sole negligence this will have an impact.

The second change specifies that AI coverage may not be broader than is granted in the contract, meaning that the scope of coverage offered an additional insured entity may now be defined by the contract rather than the policy. If a contract arguably specifies a lower dollar amount of coverage than the policy, then the contract language may prevail.

The third endorsement changes state that liability limits may not be greater than what is specified in the contract. Previously where an additional insured entity may have been covered by a $1 million policy of the insured, if the contract specifies on only $500,000 of coverage, the additional insured entity may be limited to that lower amount of coverage.

What this means for businesses is clear. A mere certificate of insurance is insufficient to know what kind of coverage a vendor or supplier actually carries. The only way to know if a vendor or contractor meets the terms of their contract is to read the policy endorsements to see if exclusions such as detailed above do not meet the contract terms the vendor agreed to.

Business Credentialing Services protects organizations' by reviewing and auditing vendor and supplier insurance certificates and endorsements to ensure they meet our client's terms and conditions. Contact BCS today for a complimentary analysis of your vendors' insurance.

Topics: AUDITING, BCS, COI Tracking, ERM, insurance, risk management, SAFETY, Uncategorized, vendors

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