Product Update

Umbrella Endorsements Discussion Revised in Contractual Risk Transfer

In this Contractual Risk Transfer release, the discussion of umbrella endorsements that can have an effect on the policy's coverage of contractually assumed liability is expanded to consider two such endorsements—"contractual liability limitation" endorsements, such as standard Insurance Services Office, Inc. (ISO), endorsement CU 21 07, and contractors limitation endorsements. CU 21 07 effectively removes most business indemnity agreements as a category of "insured contract," thereby eliminating most of the policy's contractual liability coverage. Unless a similar modification has been made to the insured's underlying general liability coverage—meaning that the insured's incidental hold harmless obligations are to be underwritten on an individual basis—the insured should resist having an endorsement to CU 21 07 attached to the umbrella policy. Contractors limitation endorsements can amend umbrella policies in similar ways and can also have a negative effect on coverage of insured-versus-insured suits and allocation of liability in a joint venture. For these reasons, contractors limitation endorsements should also be closely examined by insureds, and, if feasible, their terms and conditions should be subject to negotiation.

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