Owning commercial or residential real estate comes with numerous responsibilities, and property owners often use project managers as intermediaries to handle the day-to-day duties. Accidents and losses are common occurrences in property management, and investors need insurance to protect their assets.
What is Additional Insured Status?
Additional insured (AI) status offers coverage to individuals or groups not named on the original insurance policy. Property owners may seek additional insured status from subcontractors to cover any losses or claims that arise due to the vendor’s work. The aim is to place the financial responsibility for damages or negligence-based claims on the party that is most responsible for the claim. Having AI status also keeps insurance costs down for real estate owners, as it doesn’t affect their loss history on their personal insurance policies.
Understanding the Limitations of AI Status
Contractors’ insurance policies always provide coverage for them, as they are the named insured. AI status has limitations, and property owners may find themselves financially on the hook for some or all the losses caused by their vendors. For example, some contractors only offer AI status to their clients for the duration of the project. Once the contractor completes their work, the client loses their AI coverage. Damages due to poor construction work can take months or years to emerge. If the property owner no longer has AI status, they can’t submit construction-related claims to their vendor’s insurance.
Gaps in coverage can result in costly repairs and lawsuits that may ultimately bankrupt the property owner. Investing in adequate coverage is a crucial component of managing risks, but the terms and limitations of vendor contracts, general liability insurance, and AI endorsements can be confusing. Contact Windermere Insurance Group to discuss your coverage needs to protect your property investments and rectify any gaps in your insurance policies.