Few policy provisions are as common, yet misunderstood, as the additional insured endorsement. Invariably the subcontractor is required to designate the general contractor as an additional insured, and the extent of coverage afforded to the additional insured varies by the terms of the endorsement.

While the additional insured endorsement covers a general contractor for liability arising from the subcontractor's negligence, the former often seeks coverage for its own negligence. The general contractors' efforts have been aided by the broad interpretation to the “arising out of” clause adopted by many jurisdictions. As a result, some recent ISO additional insured forms replace the “arising out of” clause with language requiring that the general contractor's liability have been “caused by” the subcontractor's act or omissions. However, it remains to be seen whether courts interpret the latter to require that the subcontractor's negligence be the proximate cause of the general contractor's liability or whether the current “de minimus” causation standard continues.

It is also worth noting that, in many jurisdictions, the indemnity agreement in a subcontract supersedes the terms of the policy and—where the subcontractor is required to indemnify the general contractor—the subcontract may defeat the subcontractor's insurer's right to contribution.