If you review insurance documents for tenants, vendors or subcontractors, you have probably seen one. It is a single carrier endorsement, often several pages long, that lists a whole menu of additional insured types along with blanket waiver of subrogation and primary and non-contributory wording. In our industry, these are often called bucket endorsements, because they gather many coverages into one bucket.
They look comprehensive. They are often much narrower than they appear.
What a bucket endorsement usually contains
Bucket endorsements vary by carrier, but they commonly provide additional insured status for categories such as:
- Lessors of leased equipment
- Managers or lessors of premises the insured leases
- Mortgagees, assignees or receivers
- Owners or other interests from whom land has been leased
- Vendors of the insured’s products
- State or governmental agencies that issue permits
- Co-owners of insured premises
Alongside those categories, many also grant blanket waiver of subrogation and blanket primary and non-contributory status when a written contract requires them.
What is often missing
Look closely at that list. Most of the categories describe parties who lease something to the insured, lend money to the insured, or issue a permit to the insured. Very few describe the parties the insured is performing work for.
That distinction is critical for general contractors and for owners of construction projects. A subcontractor’s bucket endorsement may cover the company it rents a lift from, but not the GC it is building for. Unless the endorsement specifically includes a category for parties for whom the insured performs operations, there may be no additional insured coverage for the project at all.
We have seen more than a few certificates issued under bucket endorsements that stated coverage was provided for a project, when in fact there was no coverage for that relationship.
The landlord question
Bucket endorsements are more likely to address commercial real estate relationships, because “managers or lessors of premises” is a common category. Even so, the wording deserves attention.
- Does it cover only the party from whom the insured leases, or also the management company?
- Is coverage limited to liability arising out of the ownership, maintenance or use of the specific part of the premises leased to the insured?
- Does coverage end when the tenant moves out?
- Does it apply only when a written lease requires it?
Each of those limitations can matter when a slip-and-fall happens in a parking lot or common area rather than inside the tenant’s suite.
Why these forms exist
Carriers design bucket endorsements to handle the most common, lower-risk additional insured requests efficiently. They reduce the paperwork of issuing individual endorsements for every equipment lessor or landlord. They were never intended to satisfy every contractual requirement a policyholder might sign.
How owners and GCs should respond
- Do not accept a bucket endorsement at face value. Read the categories and find the one that fits your relationship. If none fits, you may not be covered.
- For construction work, look for a category that covers parties for whom the insured performs operations, for both ongoing and completed operations. If it is not there, a separate additional insured endorsement is needed.
- For leasing, confirm who is covered and where. The landlord entity, the manager and the areas covered should all match your lease.
- Check the waiver and primary wording separately. A bucket form may grant these on a blanket basis, but often only when a written contract executed before the loss requires them.
- Remember the layers above. A bucket endorsement on the general liability policy says nothing about the umbrella or excess.
A quick test you can run
Take any bucket endorsement you receive and ask one question: which category describes my relationship to this insured? If you are a general contractor, look for wording that covers parties for whom the insured performs operations. If you are a landlord, look for wording that covers managers or lessors of premises, and then check whether your management company is included. If you cannot point to a specific category that fits, assume you are not covered until the insured’s agent shows you otherwise.
Ask for a separate endorsement when needed
When a bucket form does not fit, the solution is usually straightforward. The insured’s agent can request a scheduled or blanket additional insured endorsement that addresses your relationship. Build that expectation into your requirements so it happens before work starts or keys are handed over.