Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 8 minutes
Navigating commercial general liability insurance can feel complicated, especially for contractors who must satisfy strict contract insurance requirements. Many construction disputes come down to a few common endorsements and limit mechanics that change who is protected, when coverage applies, and which policy pays first.
This guide explains several high-impact endorsements and terms contractors should understand: CG 20 37, waiver of subrogation, primary and non-contributory, CG 20 10, explosion, collapse, and underground hazards often called XCU, cross-suit liability, aggregate limits that apply per project or per location, per occurrence limits, and contractual liability.
Before you rely on a certificate of insurance
A certificate of insurance is evidence of insurance at a moment in time. It does not grant coverage or change the policy. If a contract requires additional insured status, waiver of subrogation, primary and non-contributory wording, or a per-project aggregate, you should request the insurer-issued endorsement forms or the endorsement schedule showing they were actually added.
Form CG 20 10 additional insured for ongoing operations
CG 20 10 is commonly used to add an upstream party as an additional insured for ongoing operations, meaning liability arising while work is in progress.
Many common CG 20 10 editions provide coverage only for bodily injury, property damage, or personal and advertising injury caused, in whole or in part, by the named insured’s acts or omissions in the performance of ongoing operations for the additional insured at the scheduled location. Many versions also state coverage applies only to the extent permitted by law and is not broader than required by contract.
Claim example
During electrical work, a fire starts, and property damage occurs. The building owner is sued and tenders the claim as an additional insured under CG 20 10. If the allegations tie the loss to the contractor’s acts or omissions during ongoing operations, the owner may receive defense and indemnity under the contractor’s policy, subject to terms and limits.
Form CG 20 37 additional insured for completed operations
CG 20 37 is commonly used to add an owner, general contractor, or other upstream party as an additional insured for completed operations. In practical terms, it is meant to address claims that arise after the contractor’s work is finished.
A critical nuance is scope. Many common CG 20 37 editions provide additional insured status only with respect to liability for bodily injury or property damage caused, in whole or in part, by your work at the scheduled location and included in the products completed operations hazard. That means it is not blanket protection for everything that happens at a project, and it does not typically cover the additional insured’s sole negligence unrelated to your work.
Claim example
A roofing contractor completes a job. Months later, water intrusion is alleged due to faulty installation, and the building owner is sued for resulting interior property damage. If the owner is an additional insured under CG 20 37 and the allegations tie the damage to the roofer’s work, the owner may be defended and indemnified under the roofer’s policy, subject to the policy terms, exclusions, and limits. Note that many CGL forms exclude the cost of repairing the defective roof itself, while still potentially covering resulting damage to other property, depending on the facts and the policy wording.
Practical takeaway: CG 20 10 and CG 20 37 are often paired. CG 20 10 addresses in-progress exposure. CG 20 37 addresses post-completion exposure.
Waiver of subrogation
Waiver of Subrogation is the insurer’s right to pursue recovery from a responsible third party after the insurer pays a covered loss. A waiver of subrogation endorsement, when properly issued, limits or waives that recovery right in favor of the party named in the waiver.
In construction contracts, waivers are often used to reduce post-loss finger-pointing between contracting parties. The key is precision: the waiver should be granted in favor of the correct party, for the correct policy, and consistent with the contract requirements. A waiver also does not eliminate every possible dispute. It primarily limits the insurer’s ability to seek reimbursement after paying a claim.
Claim example
An owner and contractor agree to waive subrogation against each other for certain insured losses. A covered loss occurs, and the contractor’s insurer pays. Because a waiver was granted in favor of the owner, the insurer may be prohibited from pursuing the owner for recovery, subject to the terms of the waiver and applicable state law.
Primary and non-contributory wording
Primary and non-contributory wording addresses the order in which policies respond when more than one policy could apply. In many construction settings, the upstream party wants the downstream contractor’s policy to respond first for the upstream party’s additional insured claim, without seeking contribution from the upstream party’s own insurance.
This is often handled through an endorsement or policy wording that makes the additional insured coverage primary when required by a written contract. It is not a magic phrase that guarantees only one insurer will ever be involved. If the claim exceeds limits, falls into an exclusion, or involves allegations outside the endorsement’s scope, other insurance may still come into play.
Claim example
A subcontractor’s operations cause property damage, and the general contractor is sued. If the general contractor is an additional insured and the subcontractor’s policy is primary and non-contributory for that additional insured relationship, the subcontractor’s policy should respond first for the general contractor’s defense and indemnity, subject to terms and limits.
Explosion, collapse, and underground hazards are often called XCU
XCU is an older industry term referring to explosion, collapse, and underground property damage hazards. One reason it causes confusion is that many standard ISO CGL forms do not automatically exclude these hazards. Instead, insurers may add endorsements to exclude explosion, collapse, and underground property damage hazards for specified operations, particularly excavation, demolition, shoring, tunneling, or work near utilities.
Contractor best practice: Do not assume you have or do not have XCU. Confirm whether an XCU exclusion endorsement is attached and which operations are affected.
Claim example
An excavation contractor strikes an underground gas line, and an explosion causes property damage and bodily injury. Coverage will depend heavily on whether an explosion, collapse, or underground exclusion applies to the contractor’s operations and whether any exceptions or separate coverage arrangements are in place.
Cross-suit and cross-liability coverage
Cross-liability refers to coverage when one insured sues another insured under the same policy. Standard CGL policies typically address this by separating insured conditions, treating each insured as if they were the only insured for coverage analysis, subject to exclusions.
Important limitation: CGL is not designed to cover pure economic loss or typical breach-of-contract damages. Cross-suit disputes that are purely financial often fall outside CGL coverage.
Claim example
Two insured parties are involved in a bodily injury suit where allegations are made against both. If one insured cross-claims against the other for bodily injury-related liability, cross-liability concepts may allow the policy to respond, subject to exclusions such as employer’s liability, workers’ compensation, or other applicable limitations.
Per project aggregate vs per location aggregate vs per occurrence limit
Contractors often hear per project or per location and assume it changes the per-occurrence limit. Most of the time, these terms relate to how the general aggregate limit applies.
- Per occurrence limit is the maximum the insurer will pay for a single occurrence, regardless of how many claims arise from that occurrence, subject to policy terms.
- Per project aggregate endorsements can modify the CGL so the general aggregate applies separately to each designated project, protecting the aggregate from being exhausted by a loss on a different job.
- Per location aggregate endorsements can also exist, typically designed for locations owned, rented, or occupied by the named insured, and should be reviewed carefully to ensure it matches the intent of a construction contract requirement.
Claim example
A contractor has multiple active projects. A large bodily injury loss on Project A could erode the policy’s general aggregate limit and leave less coverage for Project B. A per-project aggregate endorsement can help prevent Project A from consuming the general aggregate available to other projects, depending on how the endorsement is scheduled.
Contractual liability
Construction contracts routinely include indemnity and hold harmless provisions. The CGL policy addresses this through contractual liability coverage, but it is not unlimited. Liability assumed in a contract is generally excluded unless it qualifies as an insured contract, and state anti-indemnity statutes can restrict how far indemnity can go.
There are also practical claim-handling considerations. Defense of an indemnitee can be complex and may depend on policy wording, the form of suit, and whether required conditions are met.
Claim example
A contractor agrees in a written contract to indemnify an owner for bodily injury arising out of the contractor’s work, to the extent permitted by law. A third party sues the owner, alleging injury caused by unsafe conditions created by the contractor. If the indemnity obligation qualifies as an insured contract and the allegations fall within the CGL coverage grant, the contractor’s policy may respond to covered damages the contractor must pay because of that insured contract, subject to all terms, exclusions, and limits.
Quick contract insurance checklist for contractors
Use this checklist before you sign a contract or start work:
- Request the actual additional insured endorsements and confirm the edition dates.
- Confirm both ongoing operations and completed operations’ additional insured status if the contract requires both.
- Confirm primary and non-contributory status applies when required by contract.
- Confirm waiver of subrogation is issued in favor of the correct party and for the correct line of coverage.
- Review exclusions that commonly create gaps for contractors, including any XCU-related exclusion endorsements tied to your operations.
- Confirm whether a per-project aggregate endorsement is required for larger jobs or for owners who want dedicated limits.
Conclusion
For contractors, endorsements and limit mechanics are not fine print. They are the difference between effective risk transfer and an uncovered surprise claim. The most important step is to verify the actual policy endorsements, confirm the edition dates, and ensure the coverage you think you are providing matches what your contract requires.
