Contractors, construction firms, maintenance companies and other businesses that work with subcontractors might come across the “Subcontractors’ Warranty Endorsement” in their Commercial General Liability insurance policies. This endorsement mandates that contractors be named as additional insured on their subcontractors commercial general liability policies. It also requires that the contractor policies be secondary and for the subcontractor to carry the same limit or higher general liability coverage as to the contractor.
Subcontractors must at least have a minimum coverage limit of $1,000,000 as required by the insurance carrier. Failure to comply with these requirements could lead to denial of coverage and a few other coverage issues depending upon the wordings of the endorsement.
While the wording of the “Subcontractors’ Warranty Endorsement” may vary between insurance providers, the key terms generally remain consistent. Subcontractors must include the contractor as an additional insured on their policy. Ensure that all subcontractors maintain Commercial General Liability coverage from a company with an “A” rating by A.M. Best. It is important to reiterate that the contractors must be listed as additional insured on all subcontractors CGL policies.
Moreover the endorsement might also necessitate the contractor to obtain an indemnity agreement from the subcontractor as well as be added as an additional insured on their policy.