Inspector Jim Williams Talks About Naming Additional Insureds On Policies & Hold Harmless Provisions
“In my work as a property inspector for the insurance industry, I have noticed two new (to me) questions on an inspection form that signal a level of self-protection that I have not seen before.
For the first ten years of my property inspection gig, I also performed inspections for the banks/mortgage companies, as well as for insurance industry. The banks want to know when they can expect their money back, and the insurance companies want to know what level of risk they are in for on a given property.
In the second category, I see the two new questions having to do with general contractors and subcontractors. The first has to do with being named as additional insured on a sub’s insurance. The company wants to know if their covered property has a worker on site who can produce a certificate of insurance showing the contractor as additional insured in their insurance. The worker obviously has work to do that affects the whole project/property. An insurance company is obviously backing up the contractor, and they need to be protected.
This leads to the second question- is there a clause in the subcontractors’ insurance that protects his client from harm in the event of a mistake made by the sub. This is called a “hold harmless agreement”.
Nowadays on a questionnaire read to the contractor, these two questions come up all the time. For reasons such as damage or time delay. One time there was a concrete pour into a basement level floor, and the electrical contractor failed to prevent concrete from going into the conduit pipes going under the floor. The whole cleanup cost the job an additional 6 weeks of lost time while the sub got the floor, front wall, and conduit hammered up, replaced, and new cabling installed. This is the very heart of a hold harmless agreement, because the time was lost to the contractor and other subs as well, as their timetables got moved back for the lost time.
Eating up that kind of loss is something NO insurance company has an appetite for, thus the two questions.”