1. Forms
2. CU
3. CU-24-77

What the form is

The CU 24 77 12 23, titled "Noncontributory And Order Of Response – Other Insurance Condition," is an Insurance Services Office (ISO) endorsement for commercial umbrella liability policies. Its primary purpose is to amend the policy's "Other Insurance" condition to align with contractual agreements where the named insured is required to provide primary and noncontributory coverage to an additional insured. Specifically, if the named insured has agreed in writing that their insurance will apply before any other insurance available to a scheduled additional insured and will not seek contribution from that other insurance, this endorsement ensures the umbrella policy adheres to that agreement. It dictates that the umbrella coverage will respond before other insurance policies on which the additional insured is a named insured, helping to ensure a vertical exhaustion of limits.

Classes of business it applies to

This endorsement is particularly relevant for businesses that frequently enter into contracts requiring them to name other parties as additional insureds on a primary and noncontributory basis. Common examples include:

• Construction: Subcontractors are often required by general contractors to provide primary and noncontributory coverage. For instance, if a subcontractor's employee injures a third party and the general contractor is also found liable, this endorsement on the subcontractor's umbrella policy would ensure it pays out before the general contractor's own insurance policies for that specific loss, assuming the contractual requirements are met.
• Landlord/Tenant Agreements: Tenants might be required to provide such coverage to landlords.
• Service Agreements: Companies providing services to larger entities might need to offer this type of coverage.

Essentially, any business that contractually assumes the responsibility for providing primary coverage to another party via an additional insured endorsement on their umbrella policy would utilize this form.

Special considerations

Several important points to consider when using this endorsement:

• Written Agreement Required: The application of this endorsement is contingent upon a written contract or agreement where the named insured has explicitly agreed to provide coverage on a primary and noncontributory basis to the additional insured.
• Scheduled Additional Insured: The additional insured for whom this condition applies must be listed in the Schedule of the endorsement or on the Declarations.
• Distinction from Similar Endorsements: It's crucial to differentiate this endorsement from others that might only address the "noncontributory" aspect without also specifying the order of response. For example, ISO form CU 24 78 addresses the noncontributory part but may not achieve the same order of coverage.
• Purpose: ISO introduced this endorsement to provide a standardized way for insurers to meet common contractual requirements, especially when their proprietary forms were not available or sufficient.

Key information for agents and underwriters

Agents and underwriters should be aware of the following:

• Contractual Risk Management: This endorsement is a key tool in managing contractual risk transfer. Agents should identify when clients have such contractual obligations and recommend this endorsement to prevent coverage disputes or gaps.
• Underwriting Verification: Underwriters should request and review the underlying written contracts to confirm the primary and noncontributory obligations before adding this endorsement. The specific wording of the contract is critical.
• Order of Coverage: The CU 24 77 helps clarify the intended order of coverage, ensuring that the named insured's umbrella policy responds after their primary CGL policy but before the additional insured's own insurance policies. This supports the principle of vertical exhaustion.
• Related Endorsements: A similar endorsement, CX 24 32, exists for ISO's commercial excess liability policies. Additionally, the CGL endorsement CG 24 56 (Excess Insurance Provision – Order Of Response – When You Are An Additional Insured On Other Insurance) can work in conjunction with these umbrella/excess forms to further clarify the layering of coverage when an entity is an additional insured on another's policy.