CG 20 38: Additional Insured, Owners, Lessees or Contractors, Automatic Status for Other Parties When Required in Written Construction Agreement

Legal purpose and coverage scope

Section A of CG 20 38 adds two groups as additional insureds. Paragraph 1 is any person or organization for whom the named insured is performing operations when they have agreed in writing, in a contract or agreement, that it be added. Paragraph 2 is any other person or organization the named insured is required to add under the contract or agreement described in Paragraph 1. The grant follows the post-2004 pattern: liability caused, in whole or in part, by the named insured's acts or omissions, or those acting on its behalf, in the performance of ongoing operations for the additional insured.

Section B adds two exclusions for these additional insureds. The first removes injury arising from professional architectural, engineering or surveying services, including preparing or approving shop drawings, field orders and change orders, and supervisory or inspection activities. The second is the completed operations exclusion: no coverage for injury occurring after all work on the project has been completed, or after the portion of work that caused the injury has been put to its intended use. Status ends when operations for the Paragraph 1 party are completed.

Section C caps the limits. The most the insurer pays for any additional insured is the lesser of the amount required by the contract described in Paragraph A.1 or the limits available. The owner's limit is therefore set by the subcontract, not by the prime contract.

How CG 20 38 behaves in a tender or claim

An owner tendering under a subcontractor's CG 20 38 must show two things beyond the usual causation and timing questions: that the subcontract between the GC and the sub required the sub to add the owner, and that the injury arose from operations the sub was performing. If the subcontract says only "Subcontractor shall name Contractor as additional insured," the owner is not a Paragraph 2 party and the tender fails. If the subcontract incorporates the prime contract by reference, the carrier may argue that a general incorporation clause is not a requirement to add specific parties.

Commentators have also focused on the words "ongoing operations for the additional insured." A lender, a neighboring property owner or a municipality may be listed in the subcontract, but the sub is arguably not performing operations for them. Expect carriers to test that phrase when a party outside the owner and contractor chain tenders.

The limits cap is the third pressure point. If the subcontract requires $1,000,000 each occurrence while the owner expected $2,000,000 from every trade, the owner's recovery under CG 20 38 is $1,000,000, because Section C points to the contract in Paragraph A.1.

Edition history

CG 20 38 was introduced with the 04 13 additional insured forms and arrived with the same three limiters as the rest of that set. The 12 19 edition keeps the structure and changes the limits cap to refer to the amount available under the applicable limits of insurance instead of limits shown in the Declarations, so endorsements that change the limit for a loss (such as a per project aggregate) are respected.

The 2019 cycle also introduced CG 20 40, the completed operations companion with the same upstream reach. Before CG 20 40, a CG 20 38 program needed a scheduled CG 20 37, which defeats the purpose of a blanket form, or a carrier completed operations form. A clean blanket program for a subcontractor today is CG 20 38 plus CG 20 40, or CG 20 33 plus CG 20 39 where only the direct contracting party matters.

What to require or prohibit in the contract

CG 20 38 works only if the subcontract does the work. The insurance exhibit should list, by legal name, every party the prime contract requires the GC to protect, and say that the subcontractor is required to add each of them. Do not rely on incorporation by reference alone. Match the subcontract limits to the limits the owner expects, because Section C caps the owner's coverage at the subcontract amount.

• Require: CG 20 38 (04 13 or later) or a scheduled CG 20 10 listing every Schedule 1 party, plus CG 20 40 or CG 20 37 for completed operations.
• Require: a Schedule 1 list of additional insureds in the subcontract itself, updated when lenders or owners change.
• Require: subcontract limits at least equal to the limits the prime contract requires of subcontractors.
• Prohibit: carrier blanket forms that reach only parties with a direct written contract when upstream parties are required.

How Pikorua Security verifies or flags CG 20 38

Pikorua Security models the contract chain. Each project stores the prime contract's additional insured list, and each subcontract record stores what that subcontract requires. When a sub's file contains CG 20 38, the validator checks that every party on the prime contract list also appears in the subcontract's requirement, then marks each one reached or not reached. A missing lender produces a specific flag rather than a generic "AI deficient."

The validator also compares subcontract limits with the prime contract flow-down and warns when Section C would cap the owner below what the owner expects. If no completed operations companion is attached, the file stays deficient with a request for CG 20 40 or CG 20 37, and the broker receives the exact language to add.