Many CGL policies typically include an endorsement that contains a clause providing for automatic additional insured status without a project specific schedule listing names of additional insureds. (See, for example, form CG 2033 0704, “Additional Insured-Owners, Lessees or Contractors – Automatic Status When Required in Construction Agreement With You”). By this endorsement the “Who is An Insured” provision is amended “to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.” That can be a fail-safe mechanism when upstream contracting parties neglect to obtain necessary written endorsements naming specific parties. However, it only goes so far.
Effective this month, the State of Texas joins the list of states with both anti-indemnity and anti-additional insured statutes. In legislation signed last summer by Gov. Rick Perry but not effective until January 1, 2012, Texas — previously viewed by construction law practitioners as a permissible venue which it came to risk shifting and indemnification — joined the now long list of states prohibiting clauses in construction contracts requiring indemnification of indemnitees for their negligence. Moreover, in so doing, Texas also joined the small but growing list of states prohibiting additional insured requirements – such as requirements in subcontracts requiring subcontractors to add contractors, construction managers and owners as additional insureds to the subcontractors’ policies. Other states on that list include: Colorado, Kansas, Montana, New Mexico, Oklahoma, Oregon and Utah.