You've landed a contract that requires your business to add the client as an additional insured on your general liability policy. You forward the certificate of insurance, and they come back with a request for "primary and non-contributory" language. These technical insurance terms sound complicated, but they're addressing a straightforward question: whose insurance pays first when something goes wrong?
The Horan insurance agency helps Central New York businesses navigate additional insured requirements and understand how primary and non-contributory provisions affect coverage.
This article explains what these terms mean, why sophisticated clients request this language, and what happens when your policy doesn't include these provisions.
Breaking Down the Insurance Terminology
When a client requests that your policy be "primary and non-contributory," they're establishing a pecking order for insurance coverage. "Primary" means your insurance responds first to a covered claim.
"Non-contributory" means the additional insured's policy won't contribute to defense costs or settlement amounts—your policy handles the entire financial responsibility.
This arrangement helps protect the additional insured from having to use their own insurance policy when a claim arises from your work or presence at their location. Their insurance may remain untapped, preserving their coverage limits and avoiding potential premium increases from claims activity.
Read our companion article: The Importance of Being Listed as an Additional Insured on CNY Policies.
When Additional Insured Status Isn't Enough
Adding someone as an additional insured on your policy extends your liability coverage to help protect them from claims arising out of your operations. However, without primary and non-contributory language, both parties' insurance policies may be called on to respond to the same claim.
Standard insurance policies include "other insurance" clauses that determine how multiple policies interact when covering the same loss. Without primary and non-contributory provisions, these clauses can create disputes between insurers about which policy pays first and how much each contributes.
The additional insured may find themselves involved in insurance company negotiations and potentially needing to engage their own coverage.
Understanding the Real-World Application
Consider a janitorial company cleaning an office building in downtown Syracuse. The property owner requires proof of insurance with primary and non-contributory coverage before allowing the janitorial company to begin work.
The janitorial company's employee mops the floor, and a building visitor slips and falls on the wet surface before warning signs are placed.
The injured person files a lawsuit naming both the janitorial company and the property owner. This is standard practice in liability claims—attorneys name every potentially responsible party to preserve all legal options.
With Primary and Non-Contributory Coverage:
The janitorial company's general liability policy responds as primary coverage. The insurance carrier handles the defense, investigates the claim, and pays any settlement or judgment up to policy limits. The property owner's insurance policy is not involved in the claim at all—no deductible, no claim history impact, no premium implications.
Without Primary and Non-Contributory Coverage:
Both the janitorial company's policy and the property owner's policy may be called on to respond. The property owner's insurance carrier must assign legal counsel and participate in the defense, which creates a claim on their policy.
The two insurance carriers may dispute which policy should pay what portion of the defense costs and any ultimate settlement. The property owner faces potential premium increases despite having required proof of insurance from their contractor.
Why Sophisticated Organizations Request This Language
Businesses that frequently work with contractors, vendors, or service providers understand insurance risk transfer. They've likely experienced claims where inadequate insurance provisions left them responsible for defense costs and settlements.
Requesting primary and non-contributory language is a risk management best practice that helps protect their interests and eliminates coverage disputes.
Common Scenarios Requiring Primary and Non-Contributory Coverage
Several business relationships in Central New York frequently involve primary and non-contributory requirements:
- Service contractors: Janitorial, landscaping, maintenance, or repair services working at client facilities
- Subcontractors: Construction trades working under a general contractor on commercial or residential projects
- Event vendors: Caterers, entertainers, or equipment rental companies working at venues
- Product suppliers: Manufacturers or distributors delivering goods to retail or commercial locations
- Professional services: Consultants or technical specialists working on client sites
Each scenario involves potential liability claims arising from the contracted party's work or presence. The party hiring the service wants assurance that claims will be handled by the contractor's insurance without impacting their own coverage.
Adding Primary and Non-Contributory Provisions to Your Policy
Most modern commercial general liability policies can include primary and non-contributory endorsements. However, not all policies include this language automatically—you may need to request specific policy endorsements.
The endorsement modifies your policy's "other insurance" clause to specify that your coverage applies as primary insurance when you've agreed by contract to provide primary and non-contributory coverage. Some carriers include this language in standard additional insured endorsements, while others require a separate endorsement.
Your insurance advisor should review your contracts to identify primary and non-contributory requirements before policy inception or renewal. Adding these provisions typically involves minimal additional premium—far less than the complications that arise when your coverage doesn't meet contract requirements.
Certificate of Insurance Language
When you've secured primary and non-contributory coverage, your certificate of insurance should specifically state this in the description of operations section. Standard certificate language might read: "General Liability coverage is primary and non-contributory to any other insurance maintained by the Additional Insured."
The certificate itself doesn't create coverage—it merely confirms what exists in your policy. Sophisticated clients understand this distinction and may request copies of the actual policy endorsements to verify that your coverage meets their requirements. Always ensure your policy includes the required provisions before issuing certificates confirming their existence.
Avoiding Coverage Disputes
Misrepresenting your coverage on a certificate of insurance creates multiple problems. If a claim occurs and your policy doesn't actually provide primary and non-contributory coverage as stated on the certificate, the additional insured may pursue legal action against you for misrepresentation.
You may also face errors and omissions claims if you're working with an insurance agent who issued inaccurate certificates.
Verify your actual policy provisions before confirming coverage in writing. If your current policy doesn't include required endorsements, work with your insurance carrier to add them before proceeding with contract execution.
Building Contract Compliance Into Your Risk Management
Understanding primary and non-contributory requirements helps you avoid contract execution delays and coverage gaps. When bidding on work or negotiating service agreements, review insurance requirements early in the process. Common requirements include:
- Minimum liability limits (often $1 million per occurrence, $2 million aggregate)
- Additional insured status for the contracting party
- Primary and non-contributory provisions
- Waiver of subrogation
- Specific cancellation notice periods
Share these requirements with your insurance advisor during policy review. Ensuring your coverage meets standard contract requirements before you need to issue certificates streamlines contract execution and avoids the premium increases or coverage restrictions that can occur when making mid-term policy changes.
Making Coverage Work for Your Business Operations
Primary and non-contributory language represents a standard risk transfer mechanism in commercial contracts. Understanding what these terms mean and how they affect your insurance coverage helps you meet client requirements without delays or disputes.
We've covered why additional insured status alone doesn't fully protect the parties you work with, how primary and non-contributory provisions work in practice, and what steps you need to take to ensure your policy includes required language. This knowledge helps you respond to contract insurance requirements with confidence.
At the Horan insurance agency, we'd like to work with Central New York businesses to address contract insurance requirements. We review your typical client contracts and work with carriers who can provide the endorsements you need to meet standard additional insured provisions.
Click the Get a Quote button below to discuss your commercial liability coverage, or contact us to review how your current policy addresses additional insured and primary and non-contributory requirements.
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