Primary & Non-Contributory: What It Means in Insurance

The term primary & non-contributory refers to a requirement in insurance contracts where one party’s insurance policy pays first (primary) in the event of a claim, and the other party’s insurance does not have to contribute (non-contributory). This wording is common in contracts involving contractors, vendors, and landlords, and it shifts risk away from the additional insured.

Key Points

• Primary means the designated policy pays before any other insurance.

• Non-Contributory means no sharing of costs with another policy.

• Protects the additional insured (e.g., landlords, project owners, clients).

• Common in construction, real estate, and vendor agreements.

• Prevents disputes between insurance carriers about responsibility.

Structured Summary

Primary & non-contributory language ensures that one insurance policy provides full coverage first without requiring contribution from another party’s policy. It is a crucial risk management tool, especially in industries with high liability exposure.

Breaking It Down: Primary vs Non-Contributory

1. Primary Coverage

When a policy is primary, it responds first in the event of a loss. This means claims are paid by the primary insurer without waiting for other insurance to step in.

Example: A subcontractor’s liability policy is listed as primary in a contract. If an accident occurs, the subcontractor’s policy pays first before the general contractor’s insurance.

2. Non-Contributory Coverage

Non-contributory means the other party’s insurance does not have to share the claim costs. The designated insurer takes on the full responsibility, ensuring the additional insured’s policy remains untouched.

Example: A landlord requires tenants to list them as additional insured with primary & non-contributory language. If a claim arises, the tenant’s insurance pays completely, and the landlord’s policy stays unaffected.

Why Contracts Require It

Businesses and property owners want maximum protection without risking their own coverage. Adding primary & non-contributory wording ensures:

• The other party’s insurer takes responsibility first.

• No cost-sharing disputes between multiple insurers.

• Protection of loss history and claims record for the additional insured.

• Compliance with industry best practices and contractual obligations.

Industry Applications

Construction

General contractors often require subcontractors to carry liability insurance with primary & non-contributory endorsements. This shifts the risk of jobsite accidents to the subcontractor’s policy.

Real Estate & Property Management

Landlords require tenants’ insurance policies to be primary & non-contributory to protect the landlord’s own coverage.

Vendor & Service Agreements

Businesses hiring vendors (like cleaning companies, IT contractors, or delivery services) want vendors’ insurance to pay first in case of damage or liability claims.

Common Endorsements Used

To make a policy primary & non-contributory, insurance carriers often add endorsements such as:

• ISO CG 20 01 – Primary and Non-Contributory – Other Insurance Condition

• Manuscript endorsements tailored for specific contracts

These endorsements modify the policy so there is no ambiguity in claim handling.

Example Scenario

A construction worker employed by a subcontractor gets injured on a job site. The subcontractor’s liability insurance has a primary & non-contributory endorsement naming the general contractor as additional insured. Result:

• The subcontractor’s insurer pays the claim.

• The general contractor’s insurance is not tapped.

• The general contractor’s loss history remains clean.

FAQ

Is “primary & non-contributory” the same as additional insured?
Not exactly. Additional insured means another party is added to the policy. Primary & non-contributory clarifies which policy pays first.

Do all insurance policies include this by default?
No. It usually requires an endorsement. Without it, policies may share costs or dispute responsibility.

Why is non-contributory important?
It protects the additional insured from having their own insurance contribute, keeping their premiums and claims history intact.

Can my insurer refuse to add this endorsement?
Some insurers may charge extra or decline depending on risk. It’s crucial to request it upfront in contracts.

Final Thoughts

The phrase primary & non-contributory may sound technical, but it has real-world financial consequences. It decides which policy pays and ensures the additional insured’s coverage remains untouched. Whether you’re a landlord, general contractor, or business owner, requiring this language in contracts is one of the strongest ways to transfer risk.

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