Designated Person or Organization AI Endorsement

September 9, 2016

We are new to the insurance business and have been requested by one of our customers to place an additional insured endorsement on his CGL form, but we are not sure which endorsement would be the right one to use. Based on the information from the insured, we think CG 20 26, the designated person or organization endorsement, is the proper endorsement. Can you give us some clarifying information about that endorsement?

Iowa Subscriber

CG 20 26 is designed to provide additional insured protection to a person or organization whose status may not otherwise qualify for one of the other additional insured endorsements. The endorsement includes as an additional insured the person or organization shown in the schedule with respect to liability for bodily injury, property damage, or personal and advertising injury caused, in whole or in part by the acts or omissions of the named insured. This coverage is for the acts or omissions in the performance of the named insured's ongoing operations or in connection with the premises owned by or rented to the named insured.

According to the terms of CG 20 26, unless the named insured is responsible in whole or in part for resulting injury or damage, the additional insured has no coverage; in other words, sole negligence of the additional insured is not covered. On the other hand, if the additional insured can demonstrate that the named insured is at least 1 percent at fault, as much as 99 percent of fault attributable to the additional insured should be covered, on a primary basis, under the standard CGL form.

Note that one of the problems with CG 20 26 (insofar as insurers are concerned) is that coverage may not necessarily be limited solely to ongoing operations; under some circumstances, coverage could apply even after the operations have been completed. The reason is that coverage is not actually limited to bodily injury or property damage arising out of ongoing operations, but instead to liability in the performance of the named insured's ongoing operations. There can be instances when negligence occurs during the performance of ongoing operations, but injury or damage does not occur until after the operations are completed. Also, there is no wording in the endorsement stating that insurance does not apply to injury or damage occurring after all the work performed has been completed.