1. Forms
2. CG
3. CG-20-43

Additional Insured – Automatic Status When Required In Written Contract Or Agreement (CG 20 43)

The CG 20 43 is an endorsement to a Commercial General Liability (CGL) policy that automatically grants additional insured status to any person or organization when a written contract or agreement between the named insured and that party requires it. This means that if the named insured signs a contract agreeing to add another party as an additional insured, this endorsement activates that coverage without needing to specifically name the additional insured on the policy or issue a separate endorsement for each contract. The coverage for the additional insured applies to 'bodily injury' or 'property damage' (but not within the products-completed operations hazard) or 'personal and advertising injury' that is caused, in whole or in part, by the named insured's acts or omissions, or the acts or omissions of those acting on the named insured's behalf. It's important to note that this endorsement includes a broad exclusion for professional services.

Classes of Business It Applies To

This endorsement is not limited to a specific industry like construction and can be used across various business types where contractual agreements frequently require additional insured status. Its broad applicability makes it suitable for a wide range of scenarios:

• Service Agreements: Companies that enter into contracts to perform services for others, such as janitorial services, security guard providers, or event organizers, may be required to name their clients as additional insureds. For example, a snow removal contractor signing a contract with a commercial property owner would likely need to provide additional insured status to the property owner.
• Lease Agreements: Tenants leasing commercial space are often contractually obligated to name the landlord or property manager as an additional insured on their liability policy.
• Vendor Contracts: Businesses that use third-party vendors for various functions might require those vendors to name them as additional insureds. For instance, a manufacturer might require a component supplier to add them as an additional insured.
• Non-Construction Contractors: While some additional insured endorsements are specific to construction, the CG 20 43 can apply to non-construction contractors who have written agreements requiring additional insured status. For example, an IT consultant contracting with a large corporation.

The key trigger is the existence of a written contract or agreement mandating the additional insured status.

Special Considerations

There are several important points to consider when utilizing or encountering the CG 20 43 endorsement:

• Written Contract is Essential: Coverage is only triggered if there is a written contract or agreement where the named insured has agreed to provide additional insured status. Without this written agreement, the endorsement does not provide coverage to the other party.
• Scope of Coverage: The coverage provided to the additional insured is not broader than what the named insured is required to provide by the contract. It is also limited to liability caused, in whole or in part, by the named insured's acts or omissions or those acting on their behalf. This language is intended to prevent coverage for the additional insured's sole negligence.
• Products-Completed Operations Hazard Exclusion: This endorsement specifically states that it does not apply to 'bodily injury' or 'property damage' included in the 'products-completed operations hazard'. This means that if a claim arises from the named insured's completed work, this particular endorsement would not provide additional insured coverage for that claim. Separate endorsements, like the CG 20 37 or the newer automatic completed operations endorsements (CG 20 39, CG 20 40), would be needed for such exposures.
• Professional Services Exclusion: The CG 20 43 contains a significant exclusion for professional services. This exclusion is broad and lists various professional services such as legal, accounting, advertising, engineering, and architectural services. If the named insured provides any services that could be deemed professional, this exclusion could create a substantial coverage gap for the additional insured regarding those professional services. For example, if a contractor using this endorsement also provides design services, liability arising from those design services would likely be excluded for the additional insured.
• "To the Extent Permitted by Law": The endorsement states that the insurance afforded to the additional insured only applies to the extent permitted by law. This acknowledges that some states have anti-indemnity statutes that can limit the extent to which one party can be indemnified by another, which can impact the scope of additional insured coverage.
• No Direct Contract Required with the Additional Insured (in some interpretations): Some analyses suggest that forms like the CG 20 43 do not necessarily require a direct contract between the named insured and the additional insured, as long as the named insured has agreed in *a* written contract to provide coverage. However, the wording "for whom you have agreed in writing in a contract or agreement that such person(s) or organization(s) be added as an additional insured on your policy" generally implies an agreement directly with that party or an agreement that explicitly names them.

Key Information for Agents and Underwriters

Agents and underwriters should be mindful of the following when dealing with the CG 20 43:

• Pricing and Risk Assessment: While this endorsement provides automatic status, which can broaden coverage, the requirement of a written contract provides some measure of control. Underwriters will still need to assess the nature of the named insured's operations and the types of entities they typically contract with. The premium charged should reflect the increased exposure from automatically adding insureds.
• Coverage Gaps: The most significant potential coverage gap is the professional services exclusion. Agents should counsel insureds, particularly those whose services might border on professional, about this exclusion and recommend appropriate professional liability coverage if needed. The exclusion of products-completed operations coverage is another critical gap to address with separate, appropriate endorsements.
• Contractual Review: Agents should advise their clients on the importance of carefully reviewing their contracts to understand when they are obligating themselves to provide additional insured status. The terms of the contract will dictate the extent of coverage required, and the policy will respond accordingly, up to the policy limits and subject to its terms (and not broader than contractually required).
• Underwriting Guidelines: Underwriters should consider the named insured's contractual risk management practices. Do they consistently use well-drafted contracts? Are they contracting with entities that pose a significantly higher risk? The "automatic" nature means less direct control over who becomes an additional insured, so understanding the insured's business practices is crucial.
• Interaction with Other Endorsements: It's important to understand how this endorsement interacts with others, such as primary and non-contributory endorsements (e.g., CG 20 01) if required by contract.
• Documentation: While the endorsement is "automatic," maintaining copies of the written contracts that trigger additional insured status is vital for both the insured and the insurer to confirm coverage in the event of a claim.
• Alternative Endorsements: For construction risks, more specific automatic additional insured endorsements (like CG 20 33 or CG 20 38 for ongoing operations, and CG 20 39 or CG 20 40 for completed operations) might be more appropriate or provide broader coverage for all parties involved in a project. The CG 20 43 is a more general automatic endorsement.

By understanding the nuances of the CG 20 43, insurance professionals can better advise their clients, assess risk accurately, and ensure appropriate coverage is in place, minimizing potential disputes and coverage gaps.