Posted on May 17, 2014
The commercial insurance industry and policies can be full of technical jargon that requires a little extra knowledge to understand. As a subcontractor, you may find upon winning a bid for a construction project that the general contractor requests you provide a CG2037 prior to beginning the contract. So just what is a CG2037, and why is it needed?
What is the CG2037?
The CG2037 is a commercial general liability policy endorsement that modifies a standard policy by adding a personal or company such as a general contractor to the subcontractor?s policy. This endorsement essentially provides liability coverage for any claims that arise out of the subcontractor?s ongoing work at a designated location and includes completed operations.
Why is the CG2037 needed?
Most construction contracts will outline the requirements and responsibilities of each party, and creators of the project contracts typically try to define who is liable for what should an accident or mistake occur on the job site. General contractors need to be added as an additional insured to a subcontractor?s policies because they are at risk for lawsuits from the sub?s work or any flaws once the project is complete. It also covers any additional insured party from work that occurs away from the subcontractor?s premises.
Example of CG 2037 coverage
Let?s suppose that a plumbing contractor completes his work on a job site, and at the time the plumber leaves the site, the general contractor accepts his work as completed. When the entire building project nears completion and the contractor tests all systems, he discovers that a pipe burst causing flood damage to two entire floors of the building. The owner of the building sues the general contractor for damages and lost rent because of delay. The subcontractor?s additional insured CG2037 endorsement covers the general contractor to protect him from the damage caused by plumber?s work or completed operations.
The CG 2037 form requires that all additional insureds, people or organizations, be listed in the schedule along with the physical location of project and description of completed operations. Typically, there is also an additional premium charged for additional insureds on a policy.
Before starting any job, make sure to review your coverage with your insurance agent. He or she can help you determine your obligations and secure the right coverage to fully protect your company and any additional insured requirements.