Many contracts call for one company to add another company as an
additional insured on a policy of insurance. This is common in the
construction industry. It is also common in several other
circumstances. For example, a shopping centre owner may require its
security contractor and maintenance contractor to add the owner as
an additional insured.
Usually, the insurance policy covers the owner's liability
“arising out of the operations” of the contractor.
Purpose of Additional Insured Endorsement
In
Sky Clean Energy Ltd. (Sky Solar (Canada) Ltd.)
v. Economical Mutual Insurance Company,
2020 ONCA 558 (”Sky Clean”),
the Ontario Court of Appeal noted that the inclusion of the owner
under the contractor's commercial general liability policy is
an efficient and cost-effective way of allocating risks that arise
out of the contractor's operations under the contract.
