Certificates of Insurance and Additional Insured Requirements for Plumbers

The short version

Every plumbing contractor who does commercial, multi-family or GC work produces certificates of insurance, usually under time pressure: the subcontract is signed, the crew is scheduled, and the compliance department will not release the job until the certificate "passes." The certificate itself is the least important document in that exchange. It is a one-page snapshot, prepared by your broker, showing which policies you carried, with which carriers, for what limits, on the day it was printed. It does not change your coverage and it gives the party who receives it no rights.

What the other party is really asking for is a set of endorsements that modify your policies in their favor: to be an additional insured for your ongoing and completed work, to have your policy respond first (primary and non-contributory), and to have your carriers give up their right to recover from them (waiver of subrogation). Those endorsements either exist on your policies or they do not; the certificate is just where the GC looks to find out. This article explains each piece, how to read an insurance exhibit, what to push back on, and how to run the same process on your own subcontractors.

A realistic scenario

This is a hypothetical. A six-plumber commercial service and tenant-improvement company in Orange County signs a $140,000 subcontract to rough and finish the plumbing in a restaurant build-out for a general contractor it has not worked with before. Exhibit C of the subcontract is the insurance exhibit. The owner signs, forwards the GC's compliance email address to his broker with the note "they need a cert," and the certificate goes out the same day.

Three weeks in, the GC's compliance vendor rejects it. Exhibit C required additional insured status for both ongoing and completed operations on specified form numbers, primary and non-contributory wording, a waiver of subrogation on both general liability and workers' compensation, and 30 days' written notice of cancellation to the GC. The certificate shows additional insured for ongoing operations only and says nothing about primary wording or the workers' compensation waiver. Payment on the first progress billing is held.

The broker can add the completed operations endorsement and the workers' compensation waiver, but the carrier charges for the waiver. The 30-day notice to the GC cannot be provided as written. The owner spends two weeks and pays additional premium to get paid for work already done, and learns that the certificate was never the problem. The contract he signed without reading Exhibit C was.

What a certificate of insurance is, and is not

The certificate most contractors see is the ACORD 25, Certificate of Liability Insurance. It lists the insured, the producer (your broker), the carriers, each policy's number, dates and limits, a remarks box for descriptions of operations, and a certificate holder box at the bottom.

The fine print on the form says what it is. The current edition, ACORD 25 (2016/03), opens with this:

"This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not affirmatively or negatively amend, extend or alter the coverage afforded by the policies below. This certificate of insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder."

It adds that if the certificate holder is an additional insured, the policy must have additional insured provisions or be endorsed, and that a statement on the certificate "does not confer rights to the certificate holder in lieu of such endorsement(s)." California law requires the same message: Insurance Code §384 says a certificate used as evidence of coverage must state that it is not an insurance policy, does not amend, extend or alter the coverage of the listed policies, and that those policies are subject to all their terms, exclusions and conditions. In plain terms:

• It is evidence, not a contract. It shows what existed on the issue date and promises nothing about tomorrow.
• It confers no rights. Being listed as certificate holder gives a GC nothing under your policy. Only an endorsement does that.
• It does not change coverage. A remark saying "GC is additional insured" does not make the GC an additional insured if no endorsement exists.

Your license record works the same way. Unless you qualify for and have filed an exemption, CSLB requires a certificate of workers' compensation insurance on file, issued and filed by your insurer with CSLB listed as certificate holder; it is CSLB's evidence of coverage, and failing to maintain the coverage results in suspension of the license.

The endorsements a GC is actually asking for

Additional insured: ongoing operations and completed operations

An additional insured (AI) endorsement extends your general liability policy to cover another party, typically the GC and the project owner, for liability arising out of your work. Standard commercial general liability forms distinguish two periods:

• Ongoing operations — claims arising from your work while it is in progress. The GC's superintendent trips over your pipe stand; a wall you opened floods the unit next door while the job is still live.
• Completed operations — claims arising from your work after it is finished and put to its intended use. The press fitting that lets go eleven months after the certificate of occupancy. For a plumber this is often the larger exposure; see completed operations coverage for plumbing contractors.

In the standard ISO endorsement series these are separate forms, and insurance exhibits often cite them by number. The scheduled versions, which name a specific party, are CG 20 10 (ongoing operations) and CG 20 37 (completed operations). The blanket versions for parties you agree in a written construction agreement to add are CG 20 33 (ongoing operations) and CG 20 39 (completed operations); CG 20 38 extends automatic status for ongoing operations to other parties the contract requires you to add, such as the owner above the GC, and CG 20 40 is its completed operations counterpart. Many carriers use their own equivalent forms. Exhibits vary in how they word the request, so read it closely: one that cites both an ongoing and a completed operations form, or says "including completed operations," expects both, and a certificate showing only one is likely to be rejected.

Blanket versus scheduled. A scheduled AI endorsement names a specific party. A blanket AI endorsement grants the status automatically to any party you are required by written contract to add, which is what a working plumbing contractor should carry; it removes the need to amend the policy for every job. Note the condition: a handshake with a property manager does not trigger a blanket endorsement; a signed agreement with insurance requirements does.

Additional insured status is subject to the policy's terms, exclusions and endorsements like everything else. The current ISO contractor AI forms apply only to the extent permitted by law, provide coverage no broader than the contract requires, and cap what is paid for the additional insured at the lesser of the limits the contract requires or the policy's available limits. California law adds its own boundary: for most commercial subcontracts signed on or after January 1, 2013, Civil Code §2782.05 voids indemnity and insurance obligations to the extent a claim arises from the GC's active negligence or willful misconduct. The GC does not get more than you bought, or more than the law allows.

Primary and non-contributory

The GC carries its own general liability. Without further wording, a claim involving both your work and the GC may be shared between the two policies under their "other insurance" conditions. Primary and non-contributory wording says that, as to the additional insured, your policy pays first and does not seek contribution from the GC's policy. Most commercial exhibits require it. ISO's version is CG 20 01, which applies when a written contract requires your coverage to be primary and non-contributory, and many contractor policies carry it or a carrier equivalent. Check that it is actually on the policy; it is one of the most common gaps between certificate remarks and the forms schedule.

Waiver of subrogation: general liability and workers' compensation

Subrogation is your carrier's right, after paying a claim, to step into your shoes and recover from whoever caused the loss. A waiver of subrogation endorsement gives up that right as to a named party or, on a blanket basis, any party you are required by written contract to waive against.

• On general liability, the waiver prevents your carrier from recovering from the GC after paying a claim on a job. ISO's form is CG 24 04, Waiver of Transfer of Rights of Recovery Against Others to Us; many carriers use their own blanket version.
• On workers' compensation, the waiver matters more and usually costs more. If your journeyman falls through an unguarded opening on the GC's site, your workers' compensation carrier pays regardless of fault and would ordinarily have a subrogation claim against the GC. The waiver removes it. California policies use a state-specific endorsement, WC 04 03 06, Waiver of Our Right to Recover From Others Endorsement — California. It applies only to the extent you perform work under a written contract that requires the waiver, requires you to keep payroll for that work separately, and provides for an additional premium stated as a percentage of the California premium on that payroll. The percentage, and any minimum charge, are set by the carrier, so ask before you agree to it.

One point of confusion: a GC cannot be an additional insured on your workers' compensation policy in the way it is on general liability, because that policy covers your obligations to your own employees. An exhibit that demands it is usually a template error; the correct request is the waiver of subrogation and, sometimes, specified employers' liability limits.

Notice of cancellation

Older certificate forms said the insurer would "endeavor to" notify the holder of cancellation. The current ACORD 25 says only that, should any of the policies be cancelled before expiration, "notice will be delivered in accordance with the policy provisions." Most commercial policies send cancellation notices to the named insured (you), not to certificate holders. A contract demanding 30 days' written notice to the GC is asking for something your policy probably does not do on its own. Some carriers will add an endorsement giving notice of cancellation to a designated party; whether one is available, and on what terms, varies by carrier. Raise it with your broker before signing.

How to read a GC's insurance exhibit

Insurance exhibits are drafted for every trade at once, so they are almost always broader than a plumbing subcontract needs. Read with four questions:

What to push back on

Not every requirement is negotiable, but these usually are, and a GC's project manager will often accept a markup raised before the job starts:

1. Notice of cancellation to the holder. Offer what the policy actually provides.
2. Additional insured on workers' compensation. Explain that the policy does not work that way; offer the waiver of subrogation.
3. Limits far above the scope. A $40,000 water heater replacement rarely justifies a $5,000,000 umbrella requirement; ask whether the GC has a standard exhibit for small trade contracts.
4. Form numbers your carrier does not use. Many carriers write equivalent proprietary endorsements; ask the GC to accept "or equivalent."
5. Prohibited exclusions you cannot remove. Disclose and negotiate rather than sign and hope. See plumbing contractor insurance exclusions you should understand.

What is usually not negotiable: AI for ongoing and completed operations, primary and non-contributory, and the waivers. Build your program to provide them on a blanket basis and these requests become routine.

Requesting certificates quickly

Certificate turnaround is a process problem. The companies that never hold up a job keep a master certificate and copies of every endorsement in a shared folder, so a compliance department asking "send me your AI endorsement" gets it in minutes. They send the full insurance exhibit to the broker with every request, with the exact legal name and address of each party to be named, because most rejections are typos in the holder's name or a missing owner entity. And they ask whether the broker's system lets them issue standard certificates themselves for parties already covered by blanket endorsements; anything requiring a new endorsement still goes through the broker.

Collecting certificates from your own subs

Turn the process around when you hire a drain cleaning sub, an excavation crew or a 1099 plumber. Your carriers will generally charge premium at audit for subcontractors who cannot produce evidence of their own general liability and workers' compensation, treating their cost as if it were your payroll. And California law generally treats the workers of an unlicensed subcontractor as the hiring contractor's employees for workers' compensation purposes, which puts their injuries on your policy and your X-Mod. See are plumbing subcontractors covered by your insurance?.

Before any sub starts: a CSLB license number you have checked online, a certificate showing general liability and workers' compensation (or the sub's CSLB exemption, understanding what that means if they bring a helper), and the same additional insured, primary and waiver endorsements you are asked for yourself, naming your company. Put the expiration dates on a calendar. A certificate that expired mid-project is the same as none at audit.

Practical takeaway

Treat the insurance exhibit as part of the price of the job. Read it before you sign and send it to your broker with one question: which of these do we already have, which can we add, what does each cost, and which should I negotiate out? Carry blanket additional insured endorsements for ongoing and completed operations, primary and non-contributory wording, and blanket waivers of subrogation on general liability, with the workers' compensation waiver available on request. Keep the endorsement copies where you can find them. And run the same checklist on every sub who works under your license.

The Orange County contractor in our scenario would have had the completed operations endorsement and the waiver quoted before signing, the notice clause marked up, and a certificate that passed compliance the first time. If you want a licensed producer to read an insurance exhibit with you before you sign it, send it through our contact page.