Scheduled Endorsement Vs Blanket Endorsement
August 17, 2023
At times, contractors may need to add subcontractors, vendors, and other third parties to their insurance policies. This could be a requirement, for example, if they are going to enter into a contract with a new customer.
When this situation arises, it is very important for the contractor to ensure that all of the other parties that need to be covered under their insurance policy are added properly. At the same time, it’s vital for the business hiring the contractor to also ensure that all relevant parties are covered correctly.
Adding a subcontractor or third party to an insurance policy requires a signed endorsement. There are two main types of endorsements in this regard — a scheduled endorsement and a blanket endorsement.
Let’s dive into what each of them are so you can note the important differences.
Scheduled Endorsement Vs Blanket Endorsement
Anytime an outside party needs to be added to a contractor’s insurance policy, an endorsement must be signed and added. These endorsements also referred to as additional insured endorsements, will lay out in writing that the contractor’s primary insurance coverage is also extending coverage to certain other entities.
In most cases, these endorsements are added to the contractor’s general liability policy, which provides overarching coverage for damage, injuries, and more.
Scheduled endorsements and blanket endorsements are the two main options contractors will have for adding additional insureds to their policies. And while they are similar in many ways, there are some key differences that are important to understand.
What Are Blanket Additional Insured Endorsements?
A blanket additional insured endorsement is a document that will state that the insurance coverage of the policyholder will extend to any party to which the policyholder has to provide coverage contractually. This endorsement must be added to general liability policies since the policies don’t automatically include that language in them.
Blanket endorsements don’t require the policyholder to specifically name all the entities to which it wishes to extend coverage. Instead, it can add a general description of all the different types of entities that it needs to extend its insurance coverage to.
This type of endorsement is commonly used by businesses that often work with subcontractors, third parties, and other outside entities to complete their work. By going with a blanket additional insured endorsement, the business doesn’t have to go through the arduous process of individually adding every required entity to their insurance policy for each new job — and then removing them when the job is over.
Example of Blanket Additional Insured Endorsements
Blanket additional insured endorsements can be used in a variety of ways. One example would be a general contractor who needs to hire a lot of subcontractors to get a job done. You will see this commonly with home builders who “sub out” electrical, plumbing, and roofing work.
It’s also commonly used by a municipality any time an event is held on public land. If a local group wants to host a fair, for example, the municipality will likely require the group — and every vendor that is attending — to carry specific liability coverage before they can do so.
In both of these cases — and many more like them — the blanket additional insured endorsement is easier because it doesn’t require each entity to be named separately. By choosing the blanket endorsement, the main entity — either the home builder or the group hosting the event, in these examples — are simplifying the process of extending general liability coverage.
What are Scheduled Endorsements?
Scheduled additional insured endorsements work in the exact opposite way. Instead of providing blanket coverage to a wide swath of third-party entities, they provide additional insured status to only the entities that are specifically named on the policy.
Businesses that wish to go the scheduled endorsement route must specify the name of the entity they wish to be covered under their policy, as well as the dates for which they should be covered — or the job for which they should be covered if there isn’t a set end date. Coverage under the general liability insurance in this case will only be extended to those entities that are named on the policy as additional insureds.
Example of Scheduled Additional Insured Endorsements
We can use the example above of the event being hosted on municipal-owned land for scheduled additional insured endorsements as well. In this scenario, the group that is hosting the event would need to secure the name and contact information of each vendor that has been approved to be at the event.
The group would then take that information — which they are likely collecting anyway — and submit it to their insurance company. Each of those entities would then be added as a separate additional insured on their general liability policy.
They would likely have to provide the date(s) of the event as well since there is a set start and end date so the coverage will only extend to those vendors on the relevant dates. The additional insured coverage would automatically end once the dates have passed.
Understanding the Differences
The differences between scheduled endorsements and blanket endorsements are quite simple. Scheduled endorsements require the policyholder to specifically name each entity they wish to have their liability insurance coverage extended to, while blanket coverage allows them to name a general description of the entities they want to be covered.
The important thing to take under consideration, though, is how and when these endorsements work.
Blanket endorsements typically require the policyholder to have an official contract with the third-party entity in place for the insurance coverage to extend to them. That’s why it’s important that this contract is in writing before a job starts. If it’s not, then the insurance company may deny any claims that involve that third-party entity.
With scheduled endorsements, this issue wouldn’t arise, since every entity that needs to be covered will be listed on the policy as an additional insured.
Track Additional Insured Endorsements with Evident
Understanding the differences between scheduled endorsements and blanket endorsements is important whenever you’re working with or hiring a company that might be working with other subcontractors. Communicating what insurance coverage you require for the job, and then making sure that the proper coverage is added for all associated parties, is essential to protecting your own business.
Tracking all of this insurance coverage through Certificates of Insurance (COIs) can be difficult, as there is a lot of manual work and checks involved. By working with Evident, though, you can significantly reduce this manual work and also gain economies of scale.
Contact us today to find out how our COI tracking software can help you ensure all parties you work with are in compliance.