An additional insured is a person or organization added to someone else’s Insurance Policy. They get some coverage, but their protection is limited and usually tied to the policyholder’s activities. The additionally insured party is protected against specific risks without needing to buy a separate insurance policy. They’re added to the policy using a form called an endorsement.
An additional insured status in a liability policy extends the coverage beyond the policyholder to include other individuals or groups that were not named in the original policy. This is common in business relationships, landlord-tenant agreements and contracting work.
When someone is added as an additional insured, they are granted coverage under the named insured’s policy, protecting the insured party from claims—typically for claims arising out of the named insured’s operations, premises or activities. Once added to the policy, the additional insured enjoys the same level of coverage as the insured for incidents that are directly related to the insured’s operations. Coverage provided under the additional insured endorsement is often limited to liability arising out of acts performed by or on behalf of the policyholder. Protection for the additional insured party is usually limited to specific risks outlined in the endorsement.
If a lawsuit happens because of the policyholder’s actions, the additional insured can file a claim. They may also get legal defense and compensation for covered losses.
Parties often ask to be added as additional insureds to protect themselves from risks linked to another party’s actions. Additional insurance coverage can be cost-effective compared to premium expenses and can involve complexities and legal disputes, particularly concerning the responsibilities of the named insured versus the additional insured. Typically, a person or group added as an additional insured must have a business relationship with the named insured and be at risk of being sued if the policyholder is negligent. Common reasons include:
Being added as an additional insured helps lower your liability risk. It might also help lower your premiums by keeping your claims history clean.
Manufacturers can protect sellers of their products by adding them as additional insureds under the manufacturer's liability insurance policies. This strategy not only incentivizes sellers to actively promote the products but also makes sure that any product liability lawsuits they face are covered by the manufacturer's insurance policy.
It can also be a requirement for securing contracts, leases, or agreements.
Eligibility for coverage under an insurance policy depends on various factors, including the type of policy, the policyholder’s industry, and the level of risk associated with the business or operations. The policyholder must meet the eligibility criteria outlined in the policy, which may include requirements such as business licenses, certifications, or compliance with regulatory standards.
The insurance company will review things like claims history and business operations to set premium and coverage limits. The policyholder may need to provide additional information or documentation to support their eligibility for coverage, such as financial statements, business plans, or proof of compliance with industry standards.
The insurance company may also require the policyholder to complete a questionnaire or application to gather more information about the business or operations. Eligibility for coverage can be affected by changes to the business or operations, such as expansions, mergers or acquisitions, and the policyholder should notify the insurance company of any changes that may impact coverage.
Policies should be reviewed carefully to make sure all coverage requirements are met. The insurance company may offer additional coverage options or endorsements to policyholders who meet specific eligibility criteria, such as having a strong safety record.
The policyholder should work with a licensed insurance professional to navigate the application process and to make sure they meet the eligibility criteria. The insurance company will typically provide a written confirmation of the policyholder’s eligibility for coverage, outlining the terms and conditions of the policy.
You’ll often find additional insured endorsements on:
These endorsements are typically requested whenever business activities or contracts expose others to risks associated with the policyholder. For example, manufacturers may cover sellers of their products as additional insureds under the manufacturer's liability policies.
To add an additional insured:
After you add an additional insured, make sure the endorsement is filed with your insurance company.
Disputes often arise over whether the coverage extends to the independent negligence of the additional insured. When this happens:
A VIU by HUB Advisor can walk you through adding someone properly, based on the type of insurance.
The distinction between additional insured and named insured is essential in understanding insurance policies. The named insured is the primary policyholder who owns the insurance policy and enjoys full benefits and control over the coverage. They are responsible for premium payments and have the authority to make changes to the policy.
In contrast, an additional insured is a third party added to the policy through an endorsement. This status is typically granted to entities or individuals with a close relationship to the named insured, such as business partners or landlords, to extend coverage for specific liabilities arising from the named insured's actions. While additional insureds benefit from certain protections under the policy, their coverage is limited to certain risks, and they cannot alter the policy's terms. This setup helps manage liability risks and is often used in contractual agreements to protect the interests of all parties involved.
In some cases, yes. Adding an additional insured might increase your premium, especially if it broadens the insurance company’s risk.
It is important to understand and respect the interests of additional insureds when considering changes to the policy.
However, many personal and business policies include additional insured endorsements at little or no extra cost—especially for common situations like landlords or small business clients.
It’s smart to check with your advisor when requesting changes.
To remove an additional insured:
It’s important to update your policy once the relationship requiring additional insured status ends. Note that additional insured provisions can also apply to other policies beyond liability insurance, offering flexible coverage options for various risk management scenarios.
Managing additional named insureds requires careful consideration of the policyholder’s risk profile and the level of coverage required. The policyholder should work with a licensed insurance professional to determine the best approach for managing additional named insureds, including adding endorsements or modifying the policy.
The policyholder should maintain accurate records of the additional named insureds, including their contact information, business operations and level of coverage. It is essential to make sure that the additional named insureds understand the terms and conditions of the policy, including any exclusions or limitations.
Regularly reviewing the policy documents is crucial to make sure that the coverage remains adequate and that the additional named insureds are still eligible for coverage. The policyholder should notify the insurance company of any changes to the additional named insureds, such as changes to their business operations or level of risk.
The insurance company may require additional information or documentation to support the addition of new additional named insureds, such as business licenses or certifications. The policyholder should make sure that the additional named insureds comply with the terms and conditions of the policy, including any requirements for reporting claims or maintaining safety standards.
Make sure any additional named insureds understand what their policy covers and what’s expected of them. Maintaining open communication with the additional named insureds makes sure that they are aware of any changes to the policy or coverage and can address any concerns or questions they may have.
If you’re listed as an additional insured:
Always read the terms of the additional insured endorsement carefully to understand what protections apply to you.
The primary insured is the main policyholder who owns the insurance policy, enjoying full benefits and control over the coverage. They are responsible for premium payments and can make changes to the policy. In contrast, an additional insured is a third party added to the policy through an endorsement for specific liability protection. While they benefit from certain coverage, their rights are limited, and they cannot alter policy term.
