Vendor's Endorsement
An endorsement extending the manufacturer's products liability coverage to retailers and distributors who sell the manufacturer's products.
What It Is
A Vendor's Endorsement (ISO CG 20 15) extends a manufacturer's or distributor's CGL products liability coverage to include downstream vendors — retailers and distributors — who sell the manufacturer's products. The endorsement names the vendor as an additional insured specifically for products liability claims arising from the manufacturer's products.
This endorsement protects the vendor against products liability lawsuits related to defects in the products they sell. The coverage is limited to the vendor's liability arising from the manufacturer's products and does not cover the vendor's own negligence in handling, storing, or modifying the products.
Vendor's endorsements are commonly required in distribution agreements and retail contracts where the retailer demands that the manufacturer's insurance extend to cover the retailer for products liability claims.
Why It Matters for Brokers
Retailers and distributors face products liability exposure for every product they sell. While they carry their own CGL products liability coverage, they also seek vendor's endorsements from manufacturers to ensure an additional layer of protection. Brokers representing manufacturers must understand vendor's endorsement requirements and manage the process of adding retailers to their client's CGL policy. Brokers representing retailers should verify that vendor's endorsements have been provided by key suppliers.
Real-World Example
A power tool manufacturer sells through 200 retail hardware stores. A consumer is injured by a defective saw blade and sues both the manufacturer and the retail store. The vendor's endorsement on the manufacturer's CGL policy extends coverage to the retail store for this products liability claim. The manufacturer's carrier defends both the manufacturer and the retailer, and the retailer's own CGL products liability is not triggered.
Common Mistakes
- 1Not requesting vendor's endorsements from manufacturers on behalf of retail clients, leaving them to defend products liability claims under their own policy.
- 2Assuming the vendor's endorsement covers the retailer's own negligence in product handling when it only covers liability arising from the manufacturer's product defects.
- 3Using a blanket additional insured endorsement when the contract specifically requires a vendor's endorsement (CG 20 15), which provides broader products liability protection.
How brokerageaudit.com Handles This
Policy Checker identifies products liability accounts and tracks vendor's endorsement requirements from distribution agreements, verifying that downstream retailers are properly covered.