New ACORD 855 Form Addresses Exclusions and Endorsements Which May Limit or Eliminate Construction Insurance CoverageNovember 22, 2016
Until recently, the ACORD 25 certificate of liability insurance form was the standard construction industry form provided by a policyholder to an additional insured (and other interested parties), to summarize coverage information in a full commercial general liability (“CGL”) policy. However, many CGL policies offered for New York-area construction include endorsements and exclusions which can significantly limit or even eliminate coverage for certain types of losses. These limitations and exclusions are not indicated on the ACORD 25 form, and generally cannot be discovered without reviewing the entirety of the subject insurance policies. In response, ACORD has created an addendum to the ACORD 25 form – the ACORD 855 – which addresses common exclusions and endorsements which may limit or eliminate coverage.
Limitations of the ACORD 25
By intention, the ACORD 25 is succinct. It summarizes the insurer issuing the various coverages, the named insured purchasing the insurance policies, the producer (typically the insured's insurance broker), the types and limits of the policies in effect, the policy numbers, and the effective and expiration dates of the policies. While the ACORD 25 form is a valuable tool to understand the sources and amounts of an insured's policies, it fails to identify exclusions and coverage limitations.
Enter the ACORD 855 – The New York Construction Certificate of Liability Insurance Addendum
The ACORD 855 is intended to fill some of the void of the ACORD 25 by asking an insured's designated representative, usually an insurance broker, to identify the existence or non-existence of several common New York construction insurance exclusions and endorsements. Specifically, the ACORD 855 asks an insured to identify exclusions or endorsements which limit or deny coverage stemming from losses which occur:
- in certain locations,
- above a certain height limit,
- beneath grade,
- or due to the work of subcontractors.
The ACORD 855 can also help determine whether gaps exist in a CGL policy for employers’ liability and contractual liability coverage. In addition, the ACORD 855 helps to address the issue of uncertainty for additional insureds, by identifying the form number of the additional insured endorsement attached to the CGL policy. This is particularly useful for additional insureds, because the scope of additional coverage can vary significantly depending on the additional insured endorsement form attached to the policy.
Analysis of the ACORD 855
The ACORD 855 is a helpful tool to identify potential coverage gaps and limitations, but there is no substitute for having an insurance attorney review the insured's full CGL insurance policy (including all exclusions and endorsements). It is also important to bear in mind that the ACORD 855 form, like the ACORD 25 form, does not form part of the policy itself, and if there is a difference between the terms of the ACORD form and the policy, the terms of the policy control.
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