Vendor Coverage for Distributor?

Our insured is a small motel. It distributes shampoo and other toiletries to its guests as complimentary gifts. Does this qualify the insured as a vendor of the products' manufacturers? We are not sure if we should seek the additional insured—vendors endorsement for the insured. What do you think?

Arizona Subscriber

The additional insured—vendors endorsement (CG 20 15 07 04) does not define the word vendor. So, the definition found in the dictionary can be used, and that definition describes a vendor as one who sells something. Unless your insured sells the shampoo and other items, it can be said that the motel is not really a vendor.

Having said that, however, a review of the endorsement shows that the person listed on the endorsement is an additional insured with respect to BI or PD arising out of the products shown in the schedule which are distributed or sold in the regular course of the vendor's business. Even though your insured may not sell the products, it does, in a way, distribute them (as complimentary gifts). Therefore, if all parties involved in this business activity agree, it would not be unreasonable for the insured to seek a vendors endorsement.

 

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