Additional Insured vs. Indemnification: What's the Difference?

Indemnification: A Contract Promise

Indemnification is a contractual right. The subcontractor promises, in the subcontract itself, to cover certain losses the GC incurs because of the sub's work. If something goes wrong, the GC's recourse is to make a claim against the subcontractor directly, based on that contract language. That claim is only as good as the subcontractor's ability (and willingness) to pay — which is exactly why an indemnity clause alone, with nothing else behind it, is a weaker position than most GCs assume.

Additional Insured Status: An Insurance Right

Additional insured (AI) status is an insurance mechanism. When a subcontractor adds the GC as an additional insured on their general liability policy — typically through an endorsement like ISO form CG 20 10 (ongoing operations) or CG 20 37 (completed operations) — the GC gets their own direct right to coverage under that policy. It's not a promise to be reimbursed later; it's the GC actually being covered by the sub's insurer, with a separate legal relationship to that insurance company.

This matters enormously in practice. If a subcontractor goes out of business, becomes uncooperative, or simply doesn't have the assets to make good on an indemnity promise, additional insured status still gives the GC a claim against a real, solvent insurance company — independent of whether the sub personally can pay.

Primary and Noncontributory Language

Even with additional insured status, one more detail decides how the coverage actually works: is it primary and noncontributory? Without this language, the sub's insurer might treat the coverage as "excess" — meaning it only pays after the GC's own insurance is exhausted first, which defeats a large part of the purpose of requiring additional insured status in the first place. "Primary and noncontributory" endorsement language specifies that the subcontractor's policy pays first, and doesn't require the GC's own insurance to contribute or even respond at all. This single phrase is one of the highest-value details in the entire risk-transfer chain, and also one of the most commonly missing or unverified.

CG 20 10 vs. CG 20 37 — Ongoing vs. Completed Operations

The two most common ISO additional insured endorsement forms cover different windows of exposure. CG 20 10 generally covers claims arising during the subcontractor's ongoing operations — while the work is actively happening. CG 20 37 extends that coverage to completed operations — claims that surface after the sub's work is finished, a common scenario in construction defect cases. A GC who only secures CG 20 10 coverage may have no additional insured protection at all for a defect claim that surfaces after the project wraps — a significant, common gap.

General information only — not legal advice. Whether a specific endorsement form and its wording actually meet your needs depends on the underlying policy language, not just the form number. Confirm the actual endorsement wording with a licensed agent, and have contract-specific language reviewed by your attorney.