In a prior post, I discussed the widespread confusion over the meaning and use of certificates of insurance, and the importance of obtaining an additional insured endorsement. Another problem faced by additional insureds is the scope of coverage under such endorsements. Up until the early 1990s, additional insured endorsements were generally available which expressly covered “completed operations.” The “completed operations” coverage meant that the coverage applied to damage that occurred after all the work at a job site was completed. Thus, it would apply to the typical construction defect suit. Starting in the early 1990s, carriers began to modify the language slightly to refer only to claims arising out of “ongoing operations.” The carrier position is that this change eliminates completed operations coverage. It is not entirely clear, however, that this endorsement eliminates such coverage. The carriers did not want to draw attention to this change and so did not clearly state that completed operations coverage was now excluded. A good argument can be made that the restriction is not conspicuous and clear and that all damages, whenever they occur, arose out of the “ongoing operations” of the subcontractor even if the damage occurs years later after operations are completed.
A more recent change in the endorsement has been to limit the coverage to situations where the named insured has some degree of fault. Under standard forms issued prior to 2004, the general contractor named as an additional insured could be insured even for its sole negligence, as long as the loss was somehow related to the sub’s scope of work. Under the new form, the general has coverage only if the named insured subcontractor is also negligent. Thus, the general may no longer be able to transfer the risk for its sole negligence to a subcontractor’s insurer.