A general liability policy only provides defense coverage for the named insured, which means the corporation, LLC, officers, members, employees or volunteers. If you find yourself with sub contractors coming into your business or activity you need to request insurance coverage from them with limits of at least $1,000,000 per occurrence and name you as additional insured. I would recommend that you do this for their general liability, commercial auto and workers compensation.
The definition of an ADDITIONAL INSURED is:
An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured’s policy provides a certain degree of protection. An endorsement is typically required to effect additional insured status.
Why would you want to request to be named additional insured on all three policies general liability, commercial auto and workers compensation?
If the sub contractor comes onto your property to do work for you or to show at an exhibit they would usually be driving. If they have a personal auto policy there is exclusions in all personal auto policies for business pursuits. What that means is that they might have no coverage while operating their business under their personal auto policy. Their personal auto insurance company will not usually name someone as additional insured as that is an unusual request for a personal auto policy. A red light should come on when you can not get a certificate of insurance for their auto coverage!!!
Example: driving on your property the sub contractor runs over one of your customers. It is not your fault, you did not do it, but a lawsuit is filed against the sub contractor and your company. You have defense costs that might not covered under your policy as it was not an act committed by you. If you are named as additional insured under the sub contractors commercial auto policy you would have defense coverage for acts that they did.
If the sub contractor comes onto your property either to do work for you or show at an exhibit and sets up their tent and puts a stake into the ground and knocks out the electricity or water, your policy would not necessarily provide coverage for the repairs.
Example: Let’s say they put up a display; the display falls on someone that is attending the event injuring that person. Your policy might not cover this injury as it was not your act that injured the party. You would be named in a lawsuit and would have defense costs that might not be covered. If you are named as an additional insured under the sub contractors’ general liability policy you would have defense coverage for their acts.
If the sub contractor comes onto your property or to show at an exhibit they might have employees working for them. The sub contractor might not have work comp as they think that if they call them sub contractors that they can get away with it. That is a wrong approach and will bite them in the butt later but for this article we say that that have no workers compensation insurance. Since you hired them or allowed them to show up without workers compensation insurance you might be ultimately responsible for their employees injuries.
Example: You have an event where sub contractors come to set up a stage. One of the employees of the sub contractor gets injured, but the sub contractor does not have work comp. Since it was on your property and you hired the sub contractor, you can be held responsible for that employee’s medical bills, loss of income etc. Also when you go through your annual audit and do not provide proof of certificates of insurance you can be charged for that payroll even though you did not hire them. All because you did not require the correct paperwork BEFORE you allowed them on your property, business, or event.
The lesson here is to request certificates of insurance from all subcontractors or exhibitors for all three coverages in order to better protect your interests. Not doing so could cost you tens of thousands of dollars in defense costs or possibly losing a lawsuit that takes your company to bankruptcy! Work with your insurance agent to request the correct insurance from sub contractors and to make sure that you have the correct insurance in place to protect your assets.
Who should we ask for additional insured certificates in Paintball?
- Any supplier of products such as manufacturer or distributor
- Any supplier of services such as Co2, Portapotties, tents, Air for tournaments
- Any tournament promoter of their own series that comes to your field
The author, Larry Cossio, is a licensed insurance agent/broker for 30 years specializing in providing insurance for entertainment risks. He is licensed in all 50 states. He speaks at several events each year on insurance issues and has been a requested speaker for several years now. He is located in South Carolina now, after being born and raised in San Diego. www.cossioinsurance.com