COI & construction risk transfer glossary

The Association for Cooperative Operations Research and Development, the nonprofit standards body that publishes the data standards and standardized forms used across the US insurance industry, including the ACORD 25 and ACORD 28 certificates. The forms are completed and issued by the insured's agent or broker, not by ACORD. Agents may not edit the printed form language, and many states prohibit certificates that alter or expand the underlying policy.

The ACORD 25 Certificate of Liability Insurance (current edition 2016/03) is the one-page form a producer issues to summarize general liability, auto, umbrella or excess, and workers' compensation coverage at a point in time: insurers and their NAIC numbers, policy numbers, dates and limits. Its header states that it is issued as a matter of information only and confers no rights upon the certificate holder, so it proves nothing about additional insured status or waivers without the endorsement pages behind it.

The ACORD 28 Evidence of Commercial Property Insurance shows a commercial property policy's location, covered property, limits, causes of loss form and deductibles, along with any additional interest such as a mortgagee, loss payee or lender's loss payable. Landlords use it to confirm tenant property coverage and lenders use it on collateral. Like the ACORD 25, it is issued for information and does not amend the policy.

A claim pattern that starts when a subcontractor's injured employee, barred by the workers' compensation exclusive remedy from suing their own employer, sues the general contractor or owner instead. The GC or owner then brings the claim back over against the employer through contractual indemnity. Coverage for that indemnity depends on the employer's CGL insured contract coverage, which is why carrier action over exclusions, common on New York Labor Law work, are a serious defect.

A person or organization added to someone else's policy by endorsement, giving it its own right to defense and indemnity under that policy within the limits and conditions the endorsement sets. In construction the standard ISO forms are CG 20 10 (ongoing operations) and CG 20 37 (completed operations), or blanket versions such as CG 20 33 and CG 20 38. Being named as certificate holder, or listed in the Description of Operations box, does not make anyone an additional insured.

An admitted carrier is licensed by the state insurance department, files its forms and rates there, and is backed by the state guaranty fund if it fails. A non-admitted (excess and surplus lines) carrier is not licensed in that state, can use its own manuscript forms, and its policyholders generally have no guaranty fund protection. High-hazard trades such as roofing often place general liability in the surplus lines market, so their endorsement packets need closer reading.

A Roman numeral from I to XV that AM Best assigns based on an insurer's adjusted policyholders' surplus, a rough measure of how large a loss the company can absorb. Category VII represents $50 million to $100 million of adjusted surplus, which is why so many insurance exhibits require carriers rated "A- VII or better".

AM Best's opinion of an insurer's ability to meet its ongoing policy and contract obligations. The secure range runs A++ and A+ (Superior), A and A- (Excellent), and B++ and B+ (Good). Contract exhibits usually require carriers rated A- or better, and a downgrade during the policy term is a reason to revisit a vendor's compliance status.

A state law that voids certain construction indemnity clauses as against public policy. Most states bar a party from shifting liability for its own sole negligence to a subcontractor, and some go further and bar indemnity for any share of the indemnitee's own negligence. A few, including Texas and Colorado, extend the restriction to additional insured requirements, one reason the 04 13 ISO additional insured forms grant coverage only to the extent permitted by law.

An endorsement that grants additional insured status automatically to any person or organization the named insured has agreed in a written contract to add, without listing names in a schedule. ISO's CG 20 33 covers parties the named insured contracts with directly; CG 20 38 extends status to other parties in the contract chain, such as the owner above a GC. Blanket forms generally require the written contract to be signed before the injury or damage occurs.

An indemnity clause in which the subcontractor agrees to cover the indemnitee even when the loss is caused by the indemnitee's sole negligence. Intermediate form covers everything except the indemnitee's sole negligence, and limited (comparative) form covers only the subcontractor's share of fault. Broad form clauses are void in most states, so they are usually drafted with "to the fullest extent permitted by law" savings language.

Property insurance on a building while it is under construction, typically covering the structure and materials stored on site, in transit or at temporary locations, and sometimes soft costs from delay. The owner or GC usually buys it, and it ends when the building is accepted, occupied or put to its intended use. Construction contracts often pair it with a mutual waiver of subrogation among owner, GC and subcontractors.

A Contractor Controlled Insurance Program: a wrap-up bought and administered by the general contractor rather than the owner, covering the GC and enrolled subcontractors for on-site work at one project or a rolling set of projects. The GC controls claims handling and safety, and carries the program's loss experience.

The person or organization a certificate of insurance is addressed to, shown in the Certificate Holder box at the bottom of the ACORD 25. Being the certificate holder gives no rights under the policy and, under the current form, no right to notice of cancellation. To have coverage, the holder must separately qualify as an additional insured through an endorsement.

A document issued by the insured's agent or broker that summarizes the insured's coverage on the date it was printed. In US commercial practice it is almost always an ACORD 25 (liability) or ACORD 28 (property). A COI is evidence that a policy existed when it was issued, not proof that the coverage your contract requires is in force today.

Injury or damage arising from a contractor's work after the work is finished, which falls within the CGL's products-completed operations hazard. Under CG 00 01, work is deemed completed at the earliest of: all contracted work being done, all work at the job site being done, or that part of the work being put to its intended use by anyone other than another contractor on the same project. Additional insureds need CG 20 37, or a blanket completed operations form, to be covered for this period.

Coverage for bodily injury, property damage and cleanup costs caused by pollution conditions that a contractor's operations create or disturb, such as fuel spills, disturbed lead or asbestos, mold, or contaminated soil. Standard CGL policies carry a broad pollution exclusion, so excavation, demolition, environmental, mechanical and remediation trades are usually required to carry a separate CPL policy, written on either an occurrence or a claims-made basis.

The CGL exclusion that removes coverage for liability the insured assumes under a contract, with an important exception for liability assumed in an "insured contract". That exception is what makes a subcontractor's indemnity promise insurable. Endorsements that narrow the insured contract definition, such as CG 21 39 or CG 24 26, quietly shrink the exception.

The amount of a covered loss the insured must bear. Under a typical liability deductible the carrier handles and pays the claim from the first dollar, then bills the insured for the deductible amount, so the injured party is paid even if the insured cannot reimburse the carrier. Compare a self-insured retention, where the insured pays first.

The free-text box on the ACORD 25 headed Description of Operations / Locations / Vehicles, where producers reference the project, additional insureds, waivers and primary wording. When it runs out of room it continues on an ACORD 101 Additional Remarks Schedule. Statements in this box do not amend the policy; their only value is as a pointer to the endorsement forms that actually grant the coverage, which must be attached and checked.

Business auto status granted to a named third party by the CA 20 48 Designated Insured for Covered Autos Liability Coverage endorsement. The designated party becomes an insured for covered autos liability, but only to the extent it is liable for the conduct of the named insured, so it responds to vicarious claims arising from the vendor's driving.

An insurer's obligation to provide and pay for a defense against any suit seeking damages that are even potentially covered by the policy. It is broader than the duty to indemnify, and under the CGL coverage form defense costs are paid in addition to the limits of insurance. For an additional insured, a carrier's acceptance of the defense often matters more than the eventual indemnity payment.

Exterior Insulation and Finish System: a multilayer synthetic stucco cladding system that became notorious for trapping moisture and causing hidden rot in wood-framed buildings. Many CGL policies exclude it through CG 21 86 (Exclusion, Exterior Insulation and Finish Systems), so stucco, cladding and drywall subcontractors need their endorsement schedules checked for it.

Part Two of the standard workers' compensation and employers liability policy, covering an employer's liability for employee injuries that fall outside the workers' compensation statute, including third-party action over claims. Contracts typically require $1,000,000 each accident, $1,000,000 disease each employee and $1,000,000 disease policy limit. In monopolistic states it must be bought separately as stop gap coverage.

A form attached to an insurance policy that adds, removes or changes coverage, identified by its form number and edition date (for example CG 20 10 04 13). For risk transfer the endorsements are the operative documents: they decide who is insured, which operations are covered, and whether the coverage applies before yours.

The month and year printed after a form number, such as 11 85, 10 01, 07 04 or 04 13 for CG 20 10. Each edition carries different wording: the 11 85 edition covered completed work, editions from 10 93 onward limited coverage to ongoing operations, 07 04 replaced "arising out of" with "caused, in whole or in part, by", and 04 13 tied coverage to what the contract requires. Two endorsements with the same number can protect you very differently.

A workers' compensation multiplier, calculated by NCCI or a state's independent rating bureau, that compares an employer's actual losses with the losses expected for its payroll and job classifications. A 1.0 is average, below 1.0 is better than expected, and above 1.0 raises premium. GCs use it in subcontractor prequalification alongside loss runs.

An excess policy that adopts the terms, conditions and exclusions of the underlying policy it sits over, except where it says otherwise. It matters for additional insureds: if the excess policy does not recognize the additional insured status and primary wording granted below it, the GC's own umbrella can be pulled in before the subcontractor's excess layer.

The most a CGL policy will pay in a policy period for all covered damages other than those in the products-completed operations hazard, which has its own aggregate. Because one aggregate is shared across every job the subcontractor works on, losses elsewhere can exhaust it before your claim arrives, which is why exhibits require the aggregate to apply per project.

A contract promise that one party will not hold the other responsible for certain losses, usually paired with indemnity in a single "indemnify and hold harmless" clause, and read together with it in most construction contracts. Its enforceability turns on the wording, the state's anti-indemnity statute, and whether the indemnitor's CGL treats the agreement as an insured contract.

A contractual promise by one party (the indemnitor) to pay for losses, defense costs or judgments that another party (the indemnitee) incurs. Subcontract indemnity clauses run from the trade to the GC and owner and come in broad, intermediate and limited forms. Indemnity is only as good as the indemnitor's assets or its insured contract coverage.

The contract attachment, often an exhibit to the subcontract or the insurance article of a lease, that lists the coverages, limits, endorsement forms, carrier ratings and duration each vendor must carry. It is the rulebook a COI is checked against, so vague exhibits produce certificates nobody can verify.

A defined term in the CGL coverage form listing the contracts under which assumed liability is still covered. Part f, the part of any business contract in which the insured assumes another party's tort liability for bodily injury or property damage to a third party, is what insures a subcontractor's indemnity promise. CG 21 39 deletes part f, CG 24 26 limits it to the named insured's own negligence, and CG 24 17 restores coverage for work near railroads.

A report from an insurer listing every claim made under a policy over a period, with dates, descriptions, amounts paid and amounts reserved. GCs and owners request three to five years of loss runs during subcontractor prequalification to judge safety performance and spot open claims that may erode aggregates.

An endorsement drafted by a specific carrier, or negotiated for a specific insured, instead of a standard ISO or NCCI form. Manuscript wording can be broader or narrower than the ISO form it resembles, and restrictive provisions such as action over and insured versus insured exclusions often live in carrier manuscript forms. Every manuscript page has to be read, not matched by form number.

States where employers must buy workers' compensation from a state fund rather than private carriers: North Dakota, Ohio, Washington and Wyoming. State fund coverage does not include employers liability, so a subcontractor working there needs stop gap coverage, often added by endorsement to its CGL, and its COI will not show employers liability in the usual place.

The person or organization shown in the policy declarations as the insured. On a COI the named insured must match the legal entity that signed your subcontract exactly; a trade name, a parent company or a sister LLC is a different insured. The first named insured has extra duties under the common policy conditions, including paying premium and receiving cancellation notices.

Advance written notice that a policy will be cancelled or not renewed. Policy conditions and state law require the carrier to notify the first named insured, not certificate holders, and the current ACORD 25 only says notice will be delivered in accordance with the policy provisions. Holders who need notice must get it through a carrier endorsement or track policy status themselves.

An occurrence policy, such as the ISO CG 00 01 CGL form, covers injury or damage that happens during the policy period no matter when the claim is made. A claims-made policy (CG 00 02 for CGL, and most professional and many pollution policies) covers claims first made during the policy period for injury or damage after the retroactive date. Contractors' general liability should be occurrence based because construction claims surface years later.

An Owner Controlled Insurance Program: a wrap-up the project owner buys to insure the GC and enrolled subcontractors for work at a single site, usually covering general liability, workers' compensation and excess. Enrolled trades stay responsible for their own auto, off-site operations and any non-enrolled exposures, so you still need COIs from them, and their own CGL will exclude the wrapped project.

Work that is still in progress. ISO's CG 20 10, from the 10 93 edition onward, covers additional insureds only for injury or damage arising from the named insured's ongoing operations, so it stops responding once the work is completed and needs CG 20 37 behind it for completed operations claims.

An endorsement provision that makes the CGL general aggregate apply separately to each construction project, usually ISO CG 25 03 (Designated Construction Project(s) General Aggregate Limit). It keeps losses on a subcontractor's other jobs from eating into the limit available for yours. CG 25 04 does the same for designated locations.

Policy wording that makes the subcontractor's policy pay first for the additional insured (primary) and bars that carrier from seeking contribution from the additional insured's own policy (non-contributory). Without it, the CGL other insurance condition can force your policy to share the loss. ISO introduced CG 20 01 (Primary and Noncontributory, Other Insurance Condition) with the 04 13 forms.

A direct contractual relationship between two parties. An owner has privity with the GC but not with the GC's subcontractors, which matters for blanket additional insured endorsements: CG 20 33 covers only parties the named insured contracted with directly, while CG 20 38 reaches parties higher up the written contract chain, such as the owner.

The insurance agent or broker who placed the coverage and issues the certificate, shown in the Producer box on the ACORD 25. The producer, not the subcontractor's project manager, is usually the person who can fix a deficiency, which is why deficiency notices should go to the vendor and its producer at the same time.

A separate CGL aggregate limit that caps the total paid in a policy period for injury and damage within the products-completed operations hazard. Contracts commonly require $2,000,000. Because completed operations claims can surface years after a job closes, many exhibits also require the subcontractor to keep this coverage in place for a set number of years after completion.

The date on a claims-made policy before which injury, damage or wrongful acts are not covered, even if the claim is first made during the policy period. Switching carriers without carrying the retroactive date forward creates a gap for past work.

Additional insured status granted to a party named in the schedule of an endorsement such as CG 20 10, CG 20 37 or CG 20 26. It is the most explicit form of additional insured status, but the schedule has to carry your exact legal entity and, where the form asks for it, the project or location.

A fixed amount of each claim the insured must pay itself, in most forms including defense costs, before the insurer has any obligation. Unlike a deductible, the carrier does not front the money. For a GC, a rejected additional insured tender means its own SIR and defense spend absorb a claim that belonged with the subcontractor's carrier.

A CGL condition stating that the policy applies as if each named insured were the only named insured, and separately to each insured against whom a claim is made. It lets an additional insured claim coverage under a subcontractor's policy without being caught by exclusions aimed at the named insured, such as the employer's liability exclusion, and it is undercut by manuscript insured versus insured exclusions.

A loss caused entirely by one party's negligence. Additional insured endorsements from the 07 04 edition onward cover the additional insured only for injury caused, in whole or in part, by the named insured, so they do not respond to the additional insured's sole negligence, and most anti-indemnity statutes void indemnity for it.

A state law that sets an absolute deadline, measured from substantial completion, after which no construction defect claim can be filed, regardless of when the defect is discovered. The period varies by state. It is the outer bound for how long a GC should require subcontractors to keep completed operations coverage in force.

An insurer's right, after paying a claim, to step into its insured's shoes and recover from whoever caused the loss. On a jobsite that often means the subcontractor's workers' compensation carrier suing the GC or owner after paying the sub's injured worker. A waiver of subrogation removes that right in advance.

An extended reporting period on a claims-made policy that lets claims be reported after the policy ends for injury or wrongful acts that happened before it ended. The ISO claims-made CGL includes a basic extended reporting period, and a longer supplemental period can be bought by endorsement. Professional and pollution policies on finished projects often need one.

A formal written demand that another party, or its insurer, take over the defense and indemnity of a claim, based on additional insured status, contractual indemnity or both. A strong tender attaches the executed contract, the certificate and the endorsement pages in force on the date of loss, and goes to the carrier, the producer and the subcontractor at once.

Both sit above primary general liability, auto and employers liability. An umbrella can be broader than the underlying policies and drop down to cover some claims they exclude, subject to a retention; a pure excess policy follows the underlying terms and only adds limits. Exhibits should require either one to recognize additional insureds and apply on a primary and non-contributory basis above the subcontractor's primary policies.

Liability imposed on one party for another's negligence because of their relationship, such as an owner held liable for its contractor's work or a GC for its subcontractor's. Additional insured endorsements written on "caused, in whole or in part, by" wording are built to cover this kind of liability arising from the named insured's acts.

A contract term, made effective by policy endorsement, under which the subcontractor's insurer gives up its right to recover from the GC, owner or other named parties after paying a loss. The common forms are CG 24 04 for general liability, CA 04 44 for business auto and NCCI WC 00 03 13 for workers' compensation. A waiver checked on the certificate without the endorsement attached is not a waiver.

A consolidated insurance program in which one set of policies covers the owner, GC and enrolled subcontractors for work at a project, instead of each party bringing its own coverage. OCIPs and CCIPs are the two types. Enrolled trades' own CGL policies usually carry CG 21 54, which excludes the wrapped project, so confirm that off-site work and auto stay covered.