The policyholder is planning to build a new home on a vacant lot, which is currently being insured on an HO4 form. The home construction is not imminent, and there is no significant construction involved to gain access to the property. However, in order to grant the permit to build a driveway, the county is requiring the property owners to provide evidence of coverage for liability and to name the county as an additional insured. 

The carrier says it isn't able to add the county as an additional insured for the purpose of issuing permits for fence or driveway construction. The agent believes that the HO4 grants coverage for liability assumed by contract or agreement when it is in conjunction with an insured location.

Q: How do you add an additional insured to an HO4 for a vacant lot?

Response 1: If improvements are being made to the land to run utility lines or construct a driveway, it is not vacant land, but rather the beginning of construction of the new home. And while contractual liability could provide coverage for certain liabilities assumed under contract, it is not the same as an additional insured provision.

Consider a commercial project policy. That would be on a commercial general liability form with other forms attached. To arrange that, you must provide information on the general contractor constructing the dwelling and their insurance, as well as details on the construction agreement. 

If it is too early in the process to accomplish that, ask the underwriters to double-check on the additional insured issue. I have a client with the same policy and I see that additional insureds are listed in the Declarations section, and triggered by the additional insured provision included in the definition of "insured" that includes: “Any Additional Insured named in the Declarations, but only with respect to Coverages A, B, E and F if applicable to your policy and only for the 'residence premises.'" The land would need to be scheduled as residential premises.

If the carrier has different forms in your state, ask for an Additional Interests endorsement. Not quite the same as adding additional insured, but it might satisfy the county.

If the carrier can't do that, you might need to replace that HO4 with an insurer that can assist or place a separate policy for the location where the home is being built.

Response 2: An article on vacant land by Tim Wahl, published by the Missouri Association of Insurance Agents, should help. 

Response 3: I'm on your side. I think the policy language includes coverage for this property as you've described it. However, you need to be sure that the insurance company agrees, that they'll add the county as an additional insured, and that you're authorized to issue a certificate of insurance. But something tells me it won't agree with you. Worse yet, I'd bet there's an adjuster who would consider this property to be "under development," and exclude it from the definition of "vacant." 

As always, you're an agent of the insurance company. Taking a DIY approach to interpreting their contracts is subject to nasty surprises.

Response 4: Good luck getting an insurer to add the county as an additional insured. I've never known an insurer to do that. If there is any made structure on the property, it is not vacant—including a pole with a permit attached. If there is something like that, add that location to the HO4. Then, with the insured's permission, email a copy of the entire policy to the city with a note: “No such personal lines endorsement exists; have your attorney review the attached for permit compliance."

Response 5: First, why are you insuring this on an HO4? The form does cover vacant land where the building is being constructed, but that's the land itself. An HO4 is a renters policy and does not provide coverage for a structure or a structure in the process of being built. It seems to me that a builders risk policy would be better. If naming the county as an additional insured is needed, and you can't get insurance for it, get a bond or a surety. 

Response 6: The county is granting permission to put in a driveway. A driveway is considered a structure—a structure can be something besides a building—so that land is then not vacant. You need to tell the client they need a builders risk policy and an extension of liability from their existing homeowners policy. Then you can add the county as an additional insured.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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