As we discussed in our previous post, the increase in primary coverage limits has resulted in a significant increase in the cost of CGL coverage that the subcontractor must provide. If you are experiencing this situation, there is a possible solution that you can discuss with your insurance broker and, perhaps, with your carrier’s concurrence, you might be able to offer to your CM and owner as a less expensive way to provide the “horizontal exhaustion” contemplated by the subcontract’s insurance provisions. The solution comes in the form of a “Primary and Non-Contributory” endorsement to your excess and umbrella liability policies.
The “Primary and Non-Contributory” endorsement is more commonly found annexed to a CGL policy. However, in order to ensure that the subcontractor’s excess or umbrella liability policy is triggered before the CM’s and owner’s primary CGL policies, such an endorsement must also be attached to the subcontractor’s excess or umbrella policy.
We are aware of two insurers who are currently willing to add this endorsement to a subcontractor’s excess or umbrella liability policy. The language of their endorsements differs slightly, but both provide the desired effect, establishing the “primary” nature of the subcontractor’s excess and umbrella policies relative to the CGL policies of the upstream parties.
Whatever endorsement language is used, just remember that the key elements are a promise by the insurer that it will not seek contribution from any other insurance available to that party; or from any primary or excess insurance for which the party is a named or additional insured.