The Completed-Operations Tender That Fails on the Form Number
Ridgeline Construction, LLC is general contractor on a $4.2 million office renovation for Cedar Point Development. Ridgeline subcontracted the HVAC package to Ironwood Mechanical for $680,000. The subcontract requires Ironwood to name Cedar Point and Ridgeline as additional insureds, primary and non-contributory, for ongoing and completed operations, and to carry $1M/$2M CGL limits. Ironwood's policy is a CG 00 01 carrying a CG 20 10 04 13 endorsement scheduled for both entities. No completed-operations endorsement is attached. The certificate of insurance nonetheless reads "Additional Insured - Ongoing and Completed Operations."
Fourteen months after substantial completion, a condensate line Ironwood installed on a rooftop unit fails. Water damages Cedar Point's new tenant improvements ($340,000) and a tenant's server rack ($96,000). Cedar Point and Ridgeline both tender to Ironwood's carrier. The carrier denies additional-insured status for the completed-operations claim while agreeing to defend Ironwood as named insured. Ridgeline's own CGL policy is also available.
1. Is Cedar Point an additional insured for this completed-operations claim? Walk through the endorsement language and the certificate.
Read the worked answer
The endorsement controls, not the certificate. CG 20 10 04 13 grants additional insured status only for liability arising out of "your ongoing operations" performed for the additional insured, or the named insured's acts or omissions in connection with those operations. The 2004 revision exists specifically to strip completed-operations exposure out of the form; a party that needs that exposure scheduled must be added under CG 20 37 04 13 or a manuscript endorsement.
Three consequences follow:
- The certificate is informational only. Standard certificates state that they confer no rights on the holder and do not amend the policy. Estoppel against the carrier on a certificate is seldom successful; the holder's remedy runs against the broker or under the subcontract.
- The AI grant is subject to every exclusion and condition in the policy and never gives the additional insured broader coverage than the named insured has.
- Cedar Point loses on the AI tender but not necessarily on the loss. Its claim against Ironwood as named insured is a different claim. The water damage to tenant improvements and to the tenant's rack is damage to property other than Ironwood's own work, so Ironwood's own coverage likely responds to Cedar Point's suit against Ironwood.
Practical follow-up: tender Cedar Point's claim against Ironwood directly, pursue Ironwood's contractual indemnity, and put the broker on written notice of the gap.
2. Cedar Point has also sued Ridgeline directly, alleging Ridgeline failed to coordinate the trade work. Does Ridgeline's own CGL respond despite the "your work" exclusion?
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Work through the exclusions in order.
Exclusion l. (Damage to Your Work) bars property damage to "your work" arising out of it, but the exception restores coverage where the damaged work, or the work out of which the damage arose, was performed on the insured's behalf by a subcontractor. The condensate line was Ironwood's work, so the exception applies and l. does not bar the claim.
Exclusions j.(5) and j.(6) have no subcontractor exception, so they matter. j.(5) excludes the particular part of real property on which the insured is performing operations - Ridgeline was not working on the tenant improvements or the rooftop at the time of loss. j.(6) excludes property that must be repaired because "your work" was incorrectly performed on it, but j.(6) expressly does not apply to property damage included in the products-completed operations hazard, which is where a claim filed fourteen months after completion sits.
Exclusion b. (contractual liability) does not bar it either: Cedar Point alleges Ridgeline's own negligent coordination, which is tort liability, and the subcontract would qualify as an insured contract in any event.
Result: Ridgeline's own policy should defend and indemnify, subject to its limits and deductible, even though Ironwood's AI endorsement failed. That is the counterintuitive answer the exam is probing.
3. What should Ridgeline's risk manager change in the subcontract and insurance specification for the next project?
Read the worked answer
Rewrite the insurance exhibit so it describes forms, not labels.
- Require additional insured status on CG 20 37 04 13 (completed operations) in addition to CG 20 10 04 13, or a single manuscript endorsement covering both. Specify the edition date.
- Require the subcontractor to deliver specimen copies of the actual endorsements, not just an ACORD certificate, before mobilizing and again at each renewal. Cross-check the form numbers on the declarations and endorsement schedule.
- Require primary and non-contributory status by endorsement (CG 20 01 or its equivalent in the AI form), plus a waiver of subrogation in favor of the owner and the contractor.
- Set limits to the exposure: a products-completed operations aggregate that is not shared with the subcontractor's other projects, and disclosure of any per-project aggregate endorsement.
- Address deductibles and self-insured retentions, since a large SIR on the sub's policy becomes a collection problem after a loss.
- Keep a backstop: Ridgeline's own coverage, a contractual indemnity with defense obligations, and consideration of an owner's or contractor's protective policy, or an OCIP for the owner, on large projects.
- Confirm notice-of-cancellation terms and audit the certificates annually.
The broader lesson is that risk transfer lives in the endorsement schedule. The certificate only tells you what someone typed into a box.