PI Insurance - Being requested to add "interested party"

[Euler07]

Hi guys,

It's not unusual for a client to request our PI insurance certificate of currency, which we are fine providing. However, we have now been asked by our client to add their client as an "interested party" on our PI insurance. This is a relatively small project.

- Does anyone have information on this and what it specifically means and what the ramifications are?
- Why would we ever modify our insurance to add someone as an "interested party", especially when it's not our client and instead a third party?
- If everyone asked this then surely we would have thousands of interested parties on our insurance and the insurance company would not be able to handle the requests.

My gut feeling is to just reject the request. We have no contractual obligation to do this. Does anyone have any experience with this that can provide advice? Thanks

 

[SWComposites]

Suggest you discuss with your insurance company. But yes, like just reject it (or ignore it).

 

[phamENG]

This is not an unreasonable request, especially if the prime design contract stipulates an insurance requirement for the prime contractor and the subcontractors (the architect and you and other engineers/consultants).

Being listed as an 'interested party' simply means they get a copy of your certificate of insurance each year and are notified if you cancel your insurance. They have a right to know that, since if you do it could be a breach of contract.

Insurance can absolutely handle the requests. They do it all the time. For instance, I own a rental property. My tenants are contractually required to maintain renters insurance and to list me as an interested party so I know when the policy is put in place and when the policy is canceled (or they remove me as an interested party). To your point about handling the requests...once they go in, they're automated. I have one tenant who moved out 5 years ago. I still get updates on the various policies they've had as they've moved around the country since then. Same with PL insurance. All of my clients who requested a certificate of insurance get listed as interested parties, and they get notified of every renewal and change in coverage.

 

[gte447f]

I think it is as phamEMG describes. I have never heard the term "interested party" when referring to insurance policies or certificates, but I do routinely provide insurance certificates to clients as proof of insurance. Well, I don't actually provide the certificates. I actually request that my insurance broker provide the certificate. Thereafter, every year, the insurance company issues an updated certificate to the party. I guess maybe behind the scenes, or in their internal system, these parties are what are considered "interested parties". The term I am more familiar with is "certificate holder".

 

[Euler07]

Thanks for the help guys. I ended up just sending them our certificate of currency. I suspect that they asked to be an interested party simply because it was a copy and past checklist. The way I see it, if it was requested prior to design as part of the agreement then we have the option of declining the job or raising the fee to accommodate the extra paperwork.

In this particular project, it seems like the main contractor is a stickler for paperwork and is asking each sub contractor to spend thousands on extra paperwork, possibly because the admin staff of the main contractor just follow a procedure. However, the problem arises when the procedure or extra paperwork isn't agreed upon prior to carrying out the work and is requested after the fact.

Again thanks for the help.