Additional Insureds, Endorsements and Waivers: Customizing CGL for HVAC Contracts

Commercial General Liability (CGL) policies are the backbone of risk transfer for HVAC contractors, but standard CGL language often won’t satisfy commercial customers, landlords, or general contractors. Contracts increasingly require tailored endorsements — Additional Insured, Waiver of Subrogation, Primary & Noncontributory, and Per-Project Aggregate — each with meaningful coverage and premium implications. This guide (focused on HVAC contractors operating in the USA, with examples in Texas, California and Illinois) explains what each endorsement does, typical costs, negotiation tips, and how to avoid common coverage surprises.

Why endorsements matter for HVAC contracts

General contractors, building owners and property managers often demand specific insurance clauses before work starts. These requirements shift risk and defense obligations onto the subcontractor (you). Without the correct endorsements, a standard CGL may leave you exposed or non-compliant, risking contract breach, lost work, or uninsured claims.

Common contract demands:

• Be named an Additional Insured on your subcontractor’s CGL
• Provide a Waiver of Subrogation in favor of the GC or owner
• Carry Primary & Noncontributory wording
• Add a Per-Project Aggregate limit

Quick numbers: Typical premiums and costs

• Typical annual CGL cost for HVAC contractors (1M/2M limits): $800–$3,000 per year for small shops; larger payrolls/revenues push premiums higher. (Sources: Next Insurance, Insureon, The Hartford)
  • Example: Next Insurance frequently lists starter premiums for HVAC trade businesses in the $900–$1,500/yr range for modest exposures in markets such as Houston or Phoenix. (See Next Insurance)
  • The Hartford and Insureon show comparable ranges with location and payroll variations (higher in Los Angeles/San Francisco; moderate in Houston/Chicago). (See The Hartford, Insureon)
• Endorsement administrative fees are typically modest:
  • Additional Insured endorsement: commonly $25–$150 (per policy issuance or added as a policy change).
  • Waiver of Subrogation: typically $50–$300 depending on carrier and exposure.
  • Primary & Noncontributory or Per-Project Aggregate endorsements can increase premium or surcharge depending on insurer underwriting and the size/value of contracts.

External references:

• Next Insurance: https://www.nextinsurance.com/business-insurance/hvac/
• The Hartford HVAC insurance overview: https://www.thehartford.com/hvac-insurance
• Insureon HVAC insurance guide: https://www.insureon.com/small-business-insurance/hvac-insurance

Key endorsements explained

1) Additional Insured (AI)

• What it does: Extends CGL coverage to a third party (e.g., general contractor or building owner) for liability arising out of your operations.
• Typical ISO forms: CG 20 10 (ongoing operations), CG 20 26 (completed operations), and variants (some broaden or limit scope).
• Why it matters: Many GCs require AI status to ensure they can be defended under your policy for claims tied to your work.
• Negotiation tips:
  • Ask for AI only “for ongoing operations” instead of completed operations if claim exposure is long tail.
  • Insist on time-limited AI for specific projects when reasonable.
  • Confirm whether defense costs are inside or outside the limits (most are inside).

2) Waiver of Subrogation (WoS)

• What it does: Prevents your insurer from pursuing the owner/GC after paying a claim, effectively giving the owner protection even if they caused the loss.
• When required: Common in lease agreements and prime contracts.
• Cost/impact: Often a small additional premium but can raise insurer scrutiny — carriers may require additional controls or safety documentation.
• Practical note: Waiving subrogation without Additional Insured protection can disadvantage you — you give up recovery rights with no corresponding defense/control.

3) Primary & Noncontributory (P&N)

• What it does: Ensures your insurance responds first and the other party’s insurance does not contribute.
• Why GCs want it: Simplifies claims handling and avoids finger-pointing between insurers.
• Insurer caution: Because P&N affects allocation of defense costs, carriers may charge a surcharge or limit AI coverage if required broadly.

4) Per-Project Aggregate

• What it does: Converts the general policy aggregate into a limit that applies separately to one specified project (useful for large single-project exposures).
• Why it’s requested: Protects the owner/GC by ensuring the aggregate isn’t exhausted by unrelated claims.
• Cost impact: Can be a material premium driver for large projects. Carriers price per-project aggregates based on contract value and risk.

Table: Endorsement comparison (practical implications)

Practical workflows: Getting endorsements added correctly

1. Review the contract early — identify AI, WoS, P&N, and per-project aggregate requirements before bidding.
2. Request exact language — provide the insurer with the contract clause to ensure the endorsement matches the requirement.
3. Use the correct ISO form — CG 20 10 (ongoing) and CG 20 26 (completed) are the common starting points; newer or manuscript forms may be required by GCs.
4. Get written confirmation — obtain an updated COI (Certificate of Insurance) and the endorsement form itself (not just a COI note claiming “AI included”).
5. Negotiate limits — if a GC asks for high limits, consider a per-job excess policy or increasing your primary limits. See guidance on structuring limits in How to Structure General Liability Limits for HVAC Contractors: Choosing 1M/2M vs Higher.

How carriers and market examples handle endorsements

• Next Insurance: known for fast online quotes and competitive pricing for small HVAC contractors, with endorsements often available as add-ons during purchase (typical market entry premiums $900–$1,500/year depending on market). (See Next Insurance)
• The Hartford: frequently used by mid-sized mechanical contractors; underwriting can be more selective on P&N and per-project aggregates, particularly in high-value urban markets like Los Angeles and New York. (See The Hartford)
• Regional brokers in Texas (Houston/Dallas) and California (Los Angeles/San Diego) will price endorsements differently — expect surcharges in California coastal markets due to higher litigiousness and claim frequency.

Mitigating premium impact while staying compliant

• Limit AI scope to “ongoing operations” where feasible.
• Ask the other party to accept a written waiver of certain clauses if your insurer cannot deliver requested breadth.
• Bundle endorsements with broader safety programs and loss-control documentation to reduce insurer pushback.
• Consider project-specific excess policies for large contracts rather than inflating your primary limits.

Final checklist before signing a contract

• Obtain the exact endorsement forms to be added to your CGL.
• Confirm whether defense is “inside” or “outside” limits.
• Verify effective dates cover project start through warranty/completed operations period.
• Calculate the real cost: premium increase + potential impact on claim reserves.
• If unsure, consult your broker and review similar precedent language in Top 10 General Liability Claim Scenarios for HVAC Contractors — And How to Prevent Them.

For deeper reading on what the CGL itself covers and common exclusions, see General Liability for HVAC Contractors: What Commercial General Liability (CGL) Actually Covers.

Making endorsements work for you means balancing contract compliance with manageable cost and coverage certainty. Get contract clauses reviewed early, secure the exact endorsement language, and work with carriers or brokers familiar with HVAC contractual exposures in your state — for example, Houston, TX; Los Angeles, CA; and Chicago, IL — to avoid surprises that can cost far more than the endorsement premium.