Defining the name of the insured in a contractors insurance policy

Sep 12, 2017

General Contractors insurance requires careful attention to many issues that must be taken into account when drafting an accurate contractors' all-risks policy. An entrepreneur, contractor, client or construction operator - communicates with many parties and signs a variety of contracts with them as part of his activities on a daily basis. Often, such contracts include insurance clauses (laconic or thick-bodied - it doesn't matter) in which the insured is usually obligated to include the other party in the list of insureds in the contractor's work policy. In light of the above, it is clear that it is of crucial importance to express the obligations in the various contracts - by fully defining the name of the insured in the policy.

The main insured The primary insured is usually the one who orders the insurance. However, sometimes, by virtue of an agreement or contract to which the policy is subject, another legal entity can take on the role of the "primary insured." Usually, the rights of the primary insured prevail over the rights of other insureds in the policy, unless otherwise agreed. (See, for example, the case where the third-party liability limit or employers' liability is insufficient to cover the claim. The primary insured will usually receive priority).

Parent company, subsidiaries, sisters or affiliates Sometimes the company operates under several hats and a number of companies under one ownership are combined in one project. It is important to register all the companies under the insured's name, as from our point of view the comprehensive definitions are intended for the event of a malfunction and nothing more. As a routine - it is recommended to prepare an organized list of all the relevant companies that you own and/or are related to you - and update it from time to time.

General
Contractors insurance requires careful attention to many issues that must be taken into account when drafting an accurate contractors' all-risks policy.

An entrepreneur, contractor, client or construction operator - communicates with many parties and signs a variety of contracts with them as part of his activities on a daily basis.

Often, such contracts include insurance clauses (laconic or thick-bodied - it doesn't matter) in which the insured is usually obligated to include the other party in the list of insureds in the contractor's work policy.

In light of the above, it is clear that it is of crucial importance to express the obligations in the various contracts - by fully defining the name of the insured in the policy.

The main insured
The primary insured is usually the one who orders the insurance. However, sometimes, by virtue of an agreement or contract to which the policy is subject, another legal entity can take on the role of the "primary insured."
Usually, the rights of the primary insured prevail over the rights of other insureds in the policy, unless otherwise agreed. (See, for example, the case where the third-party liability limit or employers' liability is insufficient to cover the claim. The primary insured will usually receive priority).

Parent company, subsidiaries, sisters or affiliates
Sometimes the company operates under several hats and a number of companies under one ownership are combined in one project. It is important to register all the companies under the insured's name, as from our point of view the comprehensive definitions are intended for the event of a malfunction and nothing more. As a routine - it is recommended to prepare an organized list of all the relevant companies that you own and/or are related to you - and update it from time to time.

Individual insured persons

In order to provide personal protection in the policy - the definition of the insured's name must be expanded to include shareholders, stakeholders, managers, employees, etc. Although the accepted contractor policy according to the "BIT" terms partially includes certain extensions to personal liability - however, the partial solution should not be satisfied and it is better to emphasize in the definition of the insured's name in the policy their inclusion as insureds. See link to article on the subject: Personal Liability .

Secondary insureds
A long list of additional insureds that must be built and prepared - reflecting the full commitments that have been signed and weighting them according to the contractually agreed status of each party to the agreement.

Contractors and subcontractors at all levels
Project insurance is usually extended to include contractors and subcontractors who take part in the project work. And what about the subcontractors' contractors?...
The reasons for expanding coverage for subcontractors lie primarily in the question of complex liability, which can sometimes create a dispute between several insurance companies, as well as the desire of the developer to burden the costs of the policy on the contractors and finally - reducing the number of self-participations. See also an article in this context Link to the article on the website in the Articles section: Contractors Insurance - Contractor Commissions Developer and What's in Between

The work commissioner
Usually, the client of the work attaches an insurance clause and a document "Confirmation of Insurance Existence" to the contract, which regulate his status, including his definition both as an insured who will be registered in the definition of the insured's name in the policy - and as a beneficiary (the person entitled to the insurance benefits). See the chapter on the chain of responsibility for safety and the status of the client in various types of contracts. The chain of responsibility for safety in construction work

So - why get involved? Show us the full picture, provide us with the details of the various contracts, the ownership, the combination, and all the other players on the construction board - and we will infuse your policy with real content that will protect you in the cases I described and when necessary.

Local authority
Even towards the local authority, every entrepreneur has an obligation to insure against liability that will be imposed on them, which is already expressed at the stage of submitting the application for a building permit, where, as part of the signing of the various documents, there is also an indemnity letter intended to ensure that in the event of a claim against the authority in connection with the construction being carried out in the project, the entrepreneur undertakes to indemnify the authority.

Therefore, the meaning is clear: You included the authority as an insured – you have insurance against this liability. You did not do so – it could cost you dearly.

In order to provide personal protection in the policy - the definition of the insured's name must be expanded to include shareholders, stakeholders, managers, employees, etc. Although the accepted contractor policy according to the "BIT" terms partially includes certain extensions to personal liability - however, the partial solution should not be satisfied and it is better to emphasize in the definition of the insured's name in the policy their inclusion as insureds. See link to article on the subject: Personal Liability . Secondary insureds A long list of additional insureds that must be built and prepared - reflecting the full commitments that have been signed and weighting them according to the contractually agreed status of each party to the agreement.

Contractors and subcontractors at all levels Project insurance is usually extended to include contractors and subcontractors who take part in the project work. And what about the subcontractors' contractors?... The reasons for expanding coverage for subcontractors lie primarily in the question of complex liability, which can sometimes create a dispute between several insurance companies, as well as the desire of the developer to burden the costs of the policy on the contractors and finally - reducing the number of self-participations. See also an article in this context Link to the article on the website in the Articles section: Contractors Insurance - Contractor Commissions Developer and What's in Between

The work commissioner Usually, the client of the work attaches an insurance clause and a document "Confirmation of Insurance Existence" to the contract, which regulate his status, including his definition both as an insured who will be registered in the definition of the insured's name in the policy - and as a beneficiary (the person entitled to the insurance benefits). See the chapter on the chain of responsibility for safety and the status of the client in various types of contracts. The chain of responsibility for safety in construction work

Local authority Even towards the local authority, every entrepreneur has an obligation to insure against liability that will be imposed on them, which is already expressed at the stage of submitting the application for a building permit, where, as part of the signing of the various documents, there is also an indemnity letter intended to ensure that in the event of a claim against the authority in connection with the construction being carried out in the project, the entrepreneur undertakes to indemnify the authority.

Therefore, the meaning is clear: You included the authority as an insured – you have insurance against this liability. You did not do so – it could cost you dearly.

Government Offices - Ministry of Housing, Ministry of Housing and Urban Development

Life is easier here: In every public contract, the winner of the tender is required to provide proof of insurance, and on this subject, see an extensive chapter in the following link:Proof of Insurance

Partners and Partnerships
The world of real estate is fertile ground for many collaborations. Such situations should also be reflected in the definition of the insured's name in the policy, in order to protect all parties to the transaction.

Landowners in "combination" transactions
Landowners who join forces with a developer to build a project on land they own, based on consideration for some of the apartments in the building - this is common. Registering the landowners as insureds in the policy will protect them, but not only them but also the developer, who probably signed an indemnity agreement with them in the employment contract in the event of damage or a claim against them...

Owners in "Evacuation and Construction" transactions
The same applies to "evacuation-construction" transactions, in which the owners of the building are liable by virtue of being the owners of the land and/or construction rights, and it is in the developer's interest to include them as insureds, otherwise in the event of damage and a claim against them - their financial costs may apply to him (defense expenses as well as the financial consequences of a lawsuit).

Apartment owners in TAMA 38 projects, reinforcement, preservation, demolition and construction, etc.
A contract with apartment owners in a building to carry out strengthening, upgrading, and adding housing units - as well as to carry out demolition and construction, preservation, renovation, etc. - includes significant liability clauses, in addition to the liability that already exists by law.
The developer's interest is to include the tenants in the definition of the insured in the policy, as here too, the lack of insurance coverage for the tenants may be detrimental to the developer, as their responsibility may fall on his shoulders.

The protective protection - an addition that seals the insured's name
.... and/or anyone whom the insured undertook to insure before the insured event occurred.

Cross-liability clause
A cross-liability clause, which is recommended to be included in a contractor insurance policy, regulates the definition of each of the many insureds in the contractor policy as someone who, despite being an "insured" in the policy, can also be a "claimant" (third party) against another insured in the policy.

Below is the definition of the section from the 2013 Bit policy terms:
If more than one person or legal entity is included in the insured's name, the insurance will apply to each individual insured as if a separate policy had been issued in his name alone, independent of the existence of the other insureds.
The maximum insurance amount - will apply to all insured persons in the policy.