What is the Role of an Additional Insured on Your Policy and Why It Is Important?

 

If you are an Additional Insured, you enjoy the benefits of being insured under an insurance policy. An Additional Insured is typically associated with general liability insurance policies and property insurance. It provides coverage to individuals and groups that were not named initially. It refers to anyone other than the policyholder who is covered by the insurance policy.

If you are the policyholder, you are the one with the actual insurance policy and any person or company you add to your plan is referred to as an Additional Insured. Their name will appear on your certificate; however, they will only have a document if you have a physical or electronic copy made for them.

As an extension of our liability policy, your Additional Insured gains Additional Insured status which means they can turn to your insurance policy if they are sued for your actions.

The Benefits of an Additional Insured

Additional Insureds are not uncommon for large businesses that have smaller entities they are responsible for. When it comes to Additional Insured coverage, keep in mind your contractual relationships and non-signatory parties.

Consider the relationships your business has. For example, if you are a landlord, you may want to cover your tenants. Or the tenant may be required to name the landlord as an Additional Insured on the tenant’s insurance policy, so the landlord will enjoy the benefits of coverage in the event the tenant is responsible for an accident or loss.

If you are a general contractor, you may want to endorse your subcontractors as Additional Insured to protect you in the event your subcontractors are to blame for an accident and sued. If you are a manufacturer, it would be beneficial for you to cover the sellers of your products as Additional Insureds, motivating the seller to promote your products because they know your liability insurance protects them. And as a franchisor, you may want to endorse your franchisees.

How to Add an Insured

You grant your Additional Insured this status utilizing an endorsement added to your policy, identifying the additional party by name or by a general description. You are typically given the option to add Insured with any liability insurance policy.

In the event of a future claim, your Additional Insured has the rights under the named insured’s policy, and as the named insured, some carriers will charge you a premium for the privilege. The costs of adding Insured is typically low and will vary. However, it is significantly lower than the prices of the original premium.

Because most carriers offer the Additional Insured option, you can ask your insurance broker about how to endorse an Additional Insured.