By Noelle McCall, CIC, CRM, CCIP, ACRA, CISR

High Court Rules Exxon Owed Additional Insured Coverage under Umbrella Policies (irmi.com)

The article in the link above confirms why it is a best practice to require the following in your contracts with downstream parties:

• Commercial general liability and umbrella/excess liability coverage
• additional insured (AI) coverage on downstream party’s commercial general liability and all umbrella/excess liability policies
• AI coverage to apply on a primary and non-contributory basis with respect to additional insured’s insurance, deductibles, self-insured retentions, amounts excess of insurance, and self-insurance
• to the extent allowed by law, require downstream party and its subcontractors of every tier to waive their rights of recovery and require each of their respective insurance carriers to waive their subrogation rights in favor of additional insureds and indemnitees  
• minimum limits (and preferably also require the greater of limits required by law, policy limits, or limits required by contract)
• require copies of and review all additional insured, primary & non-contributory, and waiver of subrogation endorsements for compliance with contract requirements
  • require new or revised endorsements if current endorsements do not provide the full scope of required coverage

By following these best practices, businesses can reduce contractual risk, avoid unnecessary and costly litigation, and help reduce the risk of uninsured losses. 

Disclaimer - These tips are provided from an insurance and risk-related (not legal) perspective, as I am not a lawyer and cannot provide legal advice. Please consult with legal counsel on all contract wording.