Primary and non-contributory: what the wording means

The two halves, in plain words

The phrase is about one thing: which policy pays, and in what order, when two policies cover the same claim. Take a claim made against your company over a subcontractor’s work. Two general liability policies may answer it. One is the subcontractor’s, on which you are an additional insured. The other is your own, on which your company is the named insured, meaning the policyholder.

• Primary: the subcontractor’s policy pays first, before yours is called on.
• Non-contributory: the subcontractor’s insurer does not ask your insurer to share what it paid.

Your contract may hyphenate the second word. The standard forms, published by ISO (the Insurance Services Office), write noncontributory. It is the same term.

Why the other insurance condition matters

A liability policy has a condition for the case where another policy covers the same loss. On the standard policy, ISO’s Commercial General Liability Coverage Form (CG 00 01), it is headed Other Insurance. This is what the 04 13 edition says, in outline.

Read the third row from your side. If your own policy carries that wording unchanged, by its terms it steps behind a subcontractor’s primary policy that covers you as an additional insured. Your broker can tell you whether it does. What you cannot see is the subcontractor’s policy: an endorsement can change this condition, and you do not hold that policy to check. Primary and non-contributory wording is the subcontractor’s insurer saying, in its own policy, that it pays first and will not ask yours to share.

CG 20 01, and insurers’ own wording

ISO’s endorsement for this is CG 20 01, Primary and Noncontributory - Other Insurance Condition. It was first issued with the edition date 04 13, and a 12 19 edition carries the same two conditions. The form adds a paragraph to the Other Insurance condition. It says the policy is primary to other insurance available to an additional insured and will not seek contribution from it, provided that:

1. the additional insured is a named insured under that other insurance, which is the case for your own policy; and
2. the policyholder agreed in writing, in a contract or agreement, that its insurance would be primary and would not seek contribution.

The second condition points at your subcontract. On the form’s wording, the endorsement applies only if the subcontractor agreed in writing that its insurance would be primary and would not seek contribution. So a clause that says only one of the two may not be enough. Have your construction attorney check it.

Insurers also issue wording of their own, and some put it inside the additional insured endorsement itself. The City of Sierra Madre, California publishes samples of the endorsements it accepts, and they show one of each kind. So the page you receive may not be numbered CG 20 01. Check four things on it: that the policy is primary, that it will not seek contribution, who that applies to, and on what conditions. If the wording is not ISO’s, ask your broker whether it is equivalent.

Additional insured status comes first

CG 20 01 speaks only of insurance available to an additional insured under the subcontractor’s policy. It does not make anyone an additional insured. If you are not one, you are not an insured on that policy, and the endorsement has nothing to apply to.

It also changes one condition only: the order of payment. It does not widen what the additional insured endorsement covers, and it does not raise the limit. So confirm the additional insured endorsements first, then this wording. Certificate holder vs additional insured explains how, and the guide to the two standard additional insured forms covers ongoing and completed operations.

Umbrella and excess policies

CG 20 01 modifies the general liability policy. It does not reach an umbrella or excess policy above it, which has its own wording on other insurance.

You may be told that the umbrella “follows form”. A follow form umbrella takes on the terms of the policy beneath it only where its own wording does not say otherwise. Commentary from IRMI, the International Risk Management Institute, notes that follow form excess policies almost always have an other insurance section of their own. That wording can make them excess over other insurance, your own policy included. Following form does not, by itself, make an umbrella primary and non-contributory.

ISO has an umbrella endorsement, CU 24 78, titled Noncontributory - Other Insurance Condition (edition 11 16). The title leaves out the word primary, and commentary on the form by Bill Wilson describes it as noncontributory but not primary. It deals with contribution, and on its own it does not put the umbrella ahead of your own insurance. If your contract needs the subcontractor’s umbrella to pay before your own insurance, ask for the umbrella wording or endorsement that says so. Have your broker read it.

On a certificate, and what proves it

The ACORD 25, the standard certificate of liability insurance, has two narrow columns beside each policy, ADDL INSD and SUBR WVD. It has no column for primary and non-contributory. Where the wording is mentioned at all, it is free text. An example is a sentence typed in the DESCRIPTION OF OPERATIONS box, along the lines of “GL is primary and non-contributory”.

That sentence is a statement by whoever filled in the form. The notice at the top of the ACORD 25 says the certificate does not amend, extend or alter the coverage of the policies listed on it. The sentence may be right. It does not show which form grants the wording, or on what conditions. There is more on the form in What is an ACORD 25? The free certificate check reads one certificate against a standard set of requirements, with no account.

What to ask the agent for

Send the request through the subcontractor to their insurance agent, before the work starts. Ask for these.

• The primary and non-contributory endorsement on the general liability policy: CG 20 01 or an equivalent form the insurer issues, with its form number and edition date.
• The page of the same policy that lists its forms and endorsements. CG 20 01 has no schedule and no space for a name or a policy number. That page is what ties it to the policy on the certificate.
• If the wording sits inside the additional insured endorsement or the policy form itself, that page instead.
• The additional insured endorsements, for ongoing and for completed operations where your subcontract requires both.
• If your subcontract requires it of the umbrella: the umbrella wording or endorsement that says it pays before your insurance and will not seek contribution.

Ask again at each renewal, because the forms attached to a policy can change when it renews. The one-page sheet for the insurance agent puts the request, with the other endorsements, on a page the subcontractor can forward.

This guide covers the United States and is general information, not legal or insurance advice. Which policy pays first on a real claim depends on the wording of both policies and on the law of the state involved. Your broker can read the endorsement with you, and a construction attorney can tell you what your subcontract and your state make of it.