Whether you are a subcontractor who is contractually obligated to obtain additional insured coverage for another contractor, or a contractor looking to maximize the available insurance carrier for your business by securing coverage as an additional insured. There are a few critical misconceptions. Here are five.
MISCONCEPTION NUMBER 1:
If Company A is required to name Company B as an additional insured pursuant to a contract, all Company A needs to do is call its insurance broker and get a certificate of insurance naming Company B as an additional insured on Company A’s policy.
Unfortunately, a certificate of insurance naming a company as an additional insured and/or a “certificate holder” is absolutely worthless.
Unless and until you confirm that the insurance carrier has added the appropriate endorsement to the policy, you cannot be sure that the coverage is in place.
Do not get lulled into relying on a certificate of insurance as proof that you obtained coverage for another, or that you are covered under another policy.
MISCONCEPTION NUMBER 2:
If Company A does not live up to its contractual obligation to obtain additional insured coverage for Company B and an accident occurs on the Jobsite, nothing could ever come of it.
I am increasingly seeing contractors get sued for not living up to their contractual obligation to obtain additional insured coverage for another contractor on the work site.
Making matters worse, in New Jersey, it is highly unlikely that a lawsuit against a contractor for failing to obtain adequate insurance would be covered by the contractor’s own insurance policy.
Therefore, paying a lawyer to defend you and paying any settlement or judgment would be your responsibility.
MISCONCEPTION NUMBER 3:
If Company A is an additional insured on Company B’s policy, Company B’s insurance carrier will cover Company A for all claims that result from the project.
If only it were this simple. So, if you are an additional insured, the scope of coverage provided by the carrier will depend on which “Additional Insured Endorsement” is contained in the policy.
Under the language of many policies, the scope of coverage provided to an additional insured is narrow and only applies under certain circumstances.
MISCONCEPTION NUMBER 4:
If you seek additional insured coverage from an insurance company and coverage is denied, there is not much you can do about it.
Insurance companies often make mistakes in deciding what is covered under a commercial general liability insurance policy. Coverage for additional insureds is complicated and an unsettled area of the law in New Jersey.
Claims handlers unfamiliar with New Jersey law often deny meritorious claims for additional insured coverage.
The best solution is to seek a free legal consultation to understand your rights.
MISCONCEPTION NUMBER 5:
Consulting a lawyer about an insurance issue is expensive and time-consuming.
I provide free policy review and initial consultation and reasonable hourly rates. More importantly, under some circumstances, if we win the insurance company will pay my bill.
Under New Jersey law, if an insurance carrier denies coverage on a liability policy and the policyholder is successful in Court, the policyholder is entitled to attorney’s fees and costs of suit.
This can be a powerful tool and can provide leverage during litigation.
I spent over 15 years at a boutique law firm in northern New Jersey litigating insurance coverage disputes and defending personal injury cases on behalf of insurance companies. Recently, I decided to put my knowledge and experience in the insurance field to work for policyholders, particularly small businesses in the construction field, who are particularly vulnerable to unscrupulous conduct by insurance carriers. I opened the Law Firm of Matthew V. Markosian, LLC, in April of 2022. While the practice extends statewide, my office is in Princeton Junction.