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3. CU-24-78

What the Form Is

The CU 24 78 11 16 is an endorsement introduced by the Insurance Services Office (ISO) in late 2016. It is designed to be used with ISO's "Commercial Umbrella Liability Form" (CU 00 01) and its "Commercial Excess Liability Form" (CX 00 01). The primary purpose of this endorsement is to amend the "Other Insurance" condition of the policy. Specifically, it addresses situations where the named insured has entered into a written contract or agreement requiring that the insurance provided to an additional insured be on a noncontributory basis. This means that if a covered loss occurs, and the conditions of the endorsement are met, the insurer of the umbrella or excess policy will not seek contribution from the additional insured's own liability insurance policy where the additional insured is the named insured.

Classes of Business It Applies To

This endorsement is particularly relevant in commercial settings where contractual risk transfer is common and requires specific insurance arrangements for additional insureds. Examples include:

• Construction: Subcontractors are often required by general contractors or project owners to provide noncontributory coverage for the additional insureds on their umbrella policies.
• Real Estate: Property management agreements or lease agreements may stipulate that a tenant's or vendor's insurance be noncontributory for the property owner.
• Equipment Leasing: Lessees might be contractually obligated to provide noncontributory umbrella coverage for the lessor.

Essentially, any business that enters into contracts requiring them to provide additional insured status on a noncontributory basis on their umbrella or excess liability policies may utilize this endorsement.

Special Considerations

Several important points should be considered when using the CU 24 78 endorsement:

• Noncontributory Only: As the title suggests, this endorsement primarily addresses the "noncontributory" aspect of an insurance requirement. It does not, on its own, make the umbrella or excess policy primary over the additional insured's own insurance if that policy is also excess. The umbrella/excess policy typically remains excess over other primary insurance.
• Written Contract Required: The noncontributory provision applies only if the named insured has agreed in a written contract or agreement that the insurance afforded to the additional insured will be noncontributory.
• Scheduled Additional Insured: The additional insured to whom the noncontributory provision applies must be scheduled in the endorsement or the policy declarations.
• Order of Coverage: While it prevents contribution, it doesn't alter the fundamental excess nature of the umbrella or excess policy in relation to other underlying insurance. Some contractual requirements may demand that the umbrella policy respond *before* the additional insured's own insurance (both primary and noncontributory). This endorsement alone may not satisfy such a requirement regarding the order of response. ISO has since introduced endorsement CU 24 77 "Noncontributory and Order of Response—Other Insurance Condition" (e.g., edition 12 23), which appears to more comprehensively address both aspects.
• Potential for Insufficiency: Some entities, like Saint Paul Public Schools - ISD 625, explicitly state that CU 24 78 is not acceptable for their umbrella/excess liability additional insured requirements, likely due to its limitations regarding the primary order of coverage.

Key Information for Agents and Underwriters

Agents and underwriters should be mindful of the following when dealing with CU 24 78:

• Contractual Review: It is crucial to review the specific wording of the contract that mandates noncontributory coverage to ensure this endorsement adequately meets the obligation. Pay close attention to any requirements regarding the order of coverage (primary vs. excess).
• Risk Assessment: Underwriters should verify the existence of the written contract requiring noncontributory status and ensure the additional insured is properly identified and scheduled.
• Clarify Expectations: Agents should clearly explain to insureds what the endorsement does and, importantly, what it does not do, particularly concerning the "primary" aspect of "primary and noncontributory" wording often found in contracts.
• Alternative Endorsements: Be aware of other available endorsements, such as CU 24 77, which might be more suitable if the contract requires both noncontributory status and a specific order of response for the umbrella/excess policy in relation to the additional insured's other insurance.
• Underlying Policies: The application and effect of this endorsement are in the context of the umbrella or excess policy. The status of underlying policies (e.g., Commercial General Liability) regarding primary and noncontributory coverage for the additional insured is a separate but related consideration.