Sub-Manufacturers and Suppliers Warranty Endorsement – One Scary Endorsement!

That’s one scary endorsement!

The other day we were delivering a policy and we noticed an endorsement we’d never seen before. This endorsement is called Sub-Manufacturers and Suppliers Warranty or ES 98 100 05 04.

We requested a copy from the underwriter and were completely surprised to find out that this endorsement had the power to remove Product Liability insurance coverage if the following conditions were not met:

1. All sub-manufacturers and suppliers supplying any goods or products to you must have Product Liability insurance with limits no less than $1,000,000.
2. You must have certificates of insurance from all sub-manufacturers and suppliers.
3. All sub-manufacturers and suppliers must name you as “additional insured” and that must be evidenced on the certificates of Insurance provided to you.

This endorsement goes on to state “ the insured (you) agrees that this insurance policy has been issued upon the above representations and warranties and that this insurance will not apply to claims arising out of work or operation performed by any sub-manufacturer and supplier unless all of the above conditions are met.”

If all of the above conditions are not met, Product Liability insurance will not apply.

The scary word in this endorsement is “all.”  A more reasonable phrasing of this endorsement would be “endeavor to” meet the above conditions.

If you have this endorsement in your policy, make sure you contact your insurance agent to have it removed or find another insurance policy without it.