What are the implications of having a Contractual Liability Limitation endorsement - CG2139 - on a GL policy for a contractor?
Hi Deborah here, I am insurance broker with the CRIS designation specializing in contractors needs. I have a client who has had that same situation, here is the advise: The CG2139redefines the ‘Insured Contract’ to remove it’s f. point (page 13 of 16 on ISO CG0001 1001 .. is the version I have here handy.. that states an ‘Insured Contract’ is points a through f. ) Here, the f. point is basically a contract a sub would sign to work for a GC & it would include a hold harmless/indemnity agreement for tort and operations coverage. This hold harmless agreement would be worthless unless the sub is independently wealthy as his insurance company would not defend or indemnify or anything. So it can be bad for subcontractors to have this endorsement but worse for the GC’s if they were to enter into a normal business contract w/hold harmless et al with a sub who has the cg2139. Subcontractors with this endorsement need to work for GC’s that simply want to be named as additional insured on the subs’ policy. If there is no contract and the GC is named additional insured on the subs’ policy, that should be sufficient for the GC to be covered for operations and tort of the sub by the subs insurance company. If I have a client with the cg2139 in a GL quote, I just make sure to ask them if they are going to be signing a contract with a GC/developer et al and/or to let me know if they plan on it at any time in the future. If they say they won't enter into any contracts with a hold harmlessthen the cg2139 is irrelevant and being on the policy/quote is immaterial. I think insurance company’s issue this endorsement to limit the scope of work a contractor can do.They want to be sure it knows the entities it would be indemnifying ie AI endt cg2010 or equivalent. They don’t want their ‘little’ contractors getting out there and playing with the big kids without permission. ~ dmc 6-12-07 previously suggested by someone else: I suggest you to go the IIABA website. If you are a member, you can access the Virtual University, then go to "Ask an Expert" and ask your question. This is a great resource.
