Primary & Noncontributory

Primary and Noncontributory is one of those terms on insurance contracts that, unfortunately, many business owners see on their insurance contracts over the years and just accept as legaleez they don’t understand. A contractor who has experienced a claim involving multiple contractors on the job quickly realizes the importance of understanding the terms of your insurance contract.

Construction contracts frequently require that the sub-contractor make the general contractor an additional insured on their policy.  Coverage provided to the additional insured applies on a “primary and noncontributory” basis.

Primary and Noncontributory is commonly used in contract insurance requirements to stipulate the order in which multiple policies triggered by the same loss are to respond. For example, a contractor may be required to provide liability insurance that is primary and noncontributory. This means that the contractor’s policy must pay before other applicable policies (primary) and without seeking contribution from other policies that also claim to be primary (noncontributory).

Typically, the terms of the policy’s “other insurance” condition already satisfy this requirement, even though the term “primary and noncontributory” does not appear in the provision.  Nevertheless, upstream parties (the GC) often want to see the “primary and noncontributory” language.

In the case where a general contractor requires this language to appear on the contract there is an optional primary and noncontributory—other insurance condition endorsement that can be added to the policy.  This endorsement modifies the other insurance provision to expressly state that coverage provided to an additional insured is in fact primary and noncontributory when the following two conditions are met:

• the additional insured is a named insured on the other insurance available to it.
• a written contract or agreement has been entered into by the named insured stating that its policy will be primary and will not seek contribution from any other insurance available to the additional insured.

While the endorsement is technically not necessary to accomplish the primacy of the additional insured’s coverage, it will be helpful in demonstrating that the contractor’s General Liability policy does in fact provide “primary and noncontributory” coverage in compliance with construction contract requirements.