I still have a couple of two-hour online CE courses on the Agents & Brokers Education Network (ABEN). These courses are offered by almost all of the Big “I” state associations. One is a program on my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes” and the other is called “The Additional Insured Illusion and Other Feats of Contractual Risk Transfer Even David Copperfield Couldn’t Pull Off” (these links go to the Florida Big “I” page.)
One of the nice things about these courses is that someone taking a course can ask questions of the course author. Recently, I received the following question from someone taking the Additional Insured course:
Contract Requirement: “Additional Insured endorsements maintained for 2 years following the completion of work.”
How does the agent respond to this? What is our obligation to the insured?
Typically, we issue the AI endorsement during the term that it is requested and the job is usually over by the time renewal comes along.
Are we supposed to renew the policy for the next two years including the Additional Insured status?
This is a requirement of the insured, not the agent. The insured has entered into a contract that requires them to continue AI status beyond the completion of the work. The agent’s responsibility is usually to provide AI coverage on both an ongoing and completed operations basis. This may require the issuance of two endorsements.
What the agent needs to be particularly careful about is not providing any kind of confirmation of compliance beyond the existence of coverage at the time a certificate of insurance is issued. The agent can’t promise that the AI status will be maintained for two years after completion of the work because the insured can always cancel or move the account or the insurer may nonrenew…only the insured can promise to maintain coverage with its business partner being an AI.
So, if the agent is asked to provide some sort of compliance letter or other confirmation that the insurance will continue to comply with the contract, he or she should decline.
Bill Wilson, CPCU, ARM, AIM, AAM
Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.
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