Additional insured, waiver of subrogation, & primary & non-contributing on GL policy

Here is a great Q&A from Marjorie L Segale regarding Waivers of Subrogation, Non-Contributory wording, etc.


Answer Written by:

Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR
Director of Education, Insurance Community Centr, LLC
President, Segale Consulting Services, LLC



QUESTION:

Question about adding an additional insured, waiver of subrogation, and primary and non-contributing on the GL policy.


The answer was the waiver of subrogation is automatic if entered into before the loss and add the primary and non-contributing endorsement. My understanding it is the other way around. The primary wording was included and you had to endorse the waiver of subrogation (CG 2988). I read the policy (CG 00 01 10 01)and found the primary wording on page 11 of the GL policy and found on page 12 you must do nothing to impair the rights to recover.

In my list of GL endorsements I couldn’t find anything about primary and non-contributing.

Am I correct or did I read the question and answer wrong?


Submitted by Insurance Community Member


ANSWER:

Well, you hit upon the one question that I included just to be a total geek. I am impressed that you went to the policy to look before writing to us.

Here's what I want you to go back and check out. Remember to read the policy, not as the coverage for your own insured, but rather view the coverage as provided for an Additional Insured.

Waiver of Subrogation:

The CGL automatically allows a waiver of subrogation. Condition Number 8 begins with a stern statement that the insured's rights are given to the insurance company and "you must do nothing AFTER loss to impair" those rights. The policy therefore allows subrogation waiver prior to a loss, but forbids waiving those rights after a loss occurs. The main purpose of obtaining the Waiver of Subrogation endorsement is to have an express agreement, but actually is not needed and if you read the endorsement is a little restrictive in the application of the waiver.

Policy Language:


8. Transfer Of Rights Of Recovery Against Others To Us

If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them.

Primary, Non-Contributory

Other Insurance Condition Number 4:

There are two main paragraphs regarding the issue of other insurance: Primary and Excess

The language under the first paragraph says that the general liability policy is primary unless other primary insurance also applies. If there is other primary insurance available to the insured (think additional insured here) then under the next paragraph the policy says it will share on a contributory basis with the other insurance. Paragraph b. of this condition says that this insurance will be excess over other valid and collectible insurance for the named insured. This language, therefore, has no impact on the Additional Insured.

So, the purpose of primary, non-contributory is to modify paragraph a. Primary Insurance as it applies to the Additional Insured. Since the Additional Insured has their own separate insurance, there would be two primary policies available for the Additional Insured. From the standpoint of the AI, they are transferring risk to your insured and wants their own insurance program to be excess over your insured's policy.

Policy Language:

4. Other Insurance

a. Primary Insurance

This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below.

b. Excess Insurance

(1) This insurance is excess over:

(b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.

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