Additional insureds at risk for losing completed operations coverage

Industry sources report that many insurance carriers will change their policies later this year to exclude coverage for additional insureds following completed operations. This may be extremely problematic for contractors and subcontractors who are contractually bound to name others, such as owners and general contractors, as additional insureds extending through the life of the contract, including performance, completion, warranty and beyond.

When the change takes effect, coverage of additional insureds after performance will be terminated, but the contractor may still be contractually obligated to provide defense out of its own pocket. Before renewal time, contractors should explore the need for an endorsement to avoid possible lapses in coverage. Future contracts should be drafted with this potential in mind.