Do I Need A Primary & Non-Contributory Wording Endorsement?

Recently I wrote this blog about the Primary & Non-Contributory Wording Endorsement.  It was a nice article, and all true.  What I want to tell you today is that the Primary & Non-Contributory Wording endorsement is worthless.   It doesn’t mean you won’t  ever have to have one, but rest assured, it is worthless.

Why is it worthless?   In short: because it doesn’t provide any additional coverage.  It merely re-states what your General Liability policy already says.  It adds nothing.  You don’t need it because you already have it built in.

Let me clarify.  As mentioned in the blog linked above, the purpose of a Primary & Non-Contributory wording endorsement is to make sure that when you list an entity on your General Liability policy as an Additional Insured with the purpose of covering that entity for incidents in which that entity can be held vicariously liable for your actions, your insurance policy will be primary – that is, be the first one to pay for the loss – and not seek contribution from that entity’s insurance – that is, not try to get that entity’s insurance to also pay a portion of the loss.

I know, thus far, the Primary & Non-Contributory endorsement sounds pretty great, like a noble and important thing to require someone to have.  But as mentioned, the Primary and Non-Contributory Wording is already built in to the policy that the vast majority of insurance companies use.

Take a look below.  This is an excerpt from the CG 00 01 04 13, the Commercial General Liability policy created by the Insurance Services Office (ISO).  The vast majority of insurance companies use ISO’s policy as their own.  Those that don’t use the ISO version, usually borrow heavily from ISO.What that excerpt says is that this insurance policy is primary for any Additional Insured (4.a.) and is excess to any policy that you are listed on as an Additional Insured (4.b.(b)).  Once it’s established that this insurance policy is the first to pay, then it follows that it can’t seek contribution from any other insurance policy, rendering a Primary & Non-Contributory Wording endorsement unnecessary.

So why does this requirement for Primary & Non-Contributory Wording endorsements persist?  Simply put, those who write contracts for others (lawyers) that include insurance clauses aren’t educated on insurance.  If they were, they would know that ISO has included Primary & Non-Contributory wording in their policies since 1997 which would mean – as if it needs to be stated again – the need for a separate Primary & Non-Contributory Wording endorsement is unnecessary.

Of course, ISO knows that compliance personnel for the entities that are requiring Primary & Non-Contributory endorsements from others aren’t always up to date on their insurance knowledge, so just to keep the peace they’ve penned the Primary & Non-Contributory Wording endorsement that merely re-states the policy wording.  And since insurance companies know that there’s still a heavy demand for Primary & Non-Contributory Wording endorsements, they sell them, usually for a nice little sum, even though they know they’re worthless.

And so, vendors, subcontractors, commercial tenants, and all other businesses entering into contracts will continue to pay the cost for these worthless endorsements just as they have since 1997.