Section 4.21 Primary Requirement

• Library: Construction Law 2016 Supp

1. (§4.21) Primary Requirement

When one party is added to another party’s policy as an additional insured, that party has two insurance policies that will respond to the same insurable claim—its own policy and the policy under which it is an additional insured. Generally speaking, this situation occurs because policies address this situation with similar language that provides they will make payments equally. But the party requesting additional insured status wants to avoid this situation so that its own policy will only pay as a last resort. It wants the insurance policy under which it is an additional insured to pay first until its limits are gone. Then, and only then, will it want its own policy to pay the claim.

To achieve this result in light of the standard policy language, this party usually demands the other party to meet the primary requirement. Without including this requirement with a demand for additional insured status, whatever risk transfer devised by the issued additional insured endorsement becomes only half realized. See §4.13 above regarding how the Insurance Services Office, Inc. (ISO) specifically addresses the primary requirement under a named insured’s commercial general liability (CGL) policy when it is an additional insured under another’s CGL policy via its CGL policy forms. Specifically, this began with the 1997 CGL Endorsement Revisions, when endorsement CG 00 55 was made available, and the 1998 CGL Revisions, when the language of this endorsement made its way within the CGL policy form, and remains in the 2001 CGL Policy. Essentially, this language provides that an insured’s CGL policy is excess over another CGL policy when the insured is included as an additional insured “by attachment of an endorsement.”

Without addressing which policy is to be primary, especially in the case of a CGL policy because it is the policy likely to respond to most third-party-over actions, the carrier with the additional insured endorsement will try to involve any other insurance that is available, including the additional insured’s own CGL policy.

Note: Third-party-over actions involve demands or lawsuits from an injured employee against owners or others for injuries sustained at a job site. The employer of an injured worker is immune from any litigation brought by the injured worker because the latter’s sole remedy against its employer for on-the-job injuries is workers’ compensation benefits provided under the applicable state statute...