What are Additional Insureds?

It is common in business contracts to include language requiring one party to name the other as an additional insured.  This article explains what it means to name someone as an additional insured on your policy and why it is often required.

Protection against lawsuits

By requiring that it be named as an additional insured, the company is protecting itself against lawsuits. Business relationships benefit both businesses, but they also increase the risk of being sued. By requiring the other party to name them as an additional insured, they are protecting themselves against the other party’s negligence.

One example is that general contractors require their subcontractors to name the general contractor as an additional insured to protect themselves in the event of a lawsuit arising from the subcontractor’s work.  If they are named as additional insured on the subcontractor’s policy, then the subcontractor’s policy will respond to any lawsuits that name the general contractor for work done by the subcontractor.  For this reason, contractors should never work with subcontractors without a certificate of insurance naming them as additional insured on the Subcontractor’s policy.

Another example is a customer slipping on a wet floor in a grocery store and suing both the store and the property owner. If the property owner has been named as additional insured on the tenant’s policy, then the tenant’s policy will respond to the lawsuit. Without being named as Additional Insured on the tenant’s policy, the property owner would need to file a claim under their insurance. For this reason, property owners should always get a certificate of insurance from their tenants, naming the property owner as additional insured.

The need for additional insured status should be built into the contract. Always use a contract when working with subcontractors or in a business relationship with another company, and always require them to name you as an additional insured. Having clearly defined roles for both parties is essential, especially when it comes to insurance coverage. You can even specify the minimum limits they should carry to provide adequate coverage, as well as the types of insurance they need, such as General Liability, Workers’ Compensation, and Professional Liability.

Your insurance agent can help you determine what limits and coverages you should require your subcontractors to carry to keep your business protected.

How are Additional Insured’s named?

Some policies include wording that certain parties, such as a landlord, are already included as additional insureds. In addition, some policies automatically include someone as an additional insured when required by a written contract.

In these cases, a certificate is issued to the additional insured. The Certificate of Insurance will name them as additional insureds. It will show the limits of coverage, policy dates, policy number, and any other information needed, such as the location address or job details.

For policies that do not include automatic additional insured status to certain parties, an additional insured endorsement is issued. Some policies provide blanket additional insured status, while others are specific to a single entity and require an endorsement for each additional insured. Endorsements can be standardized ISO endorsements, or carriers can develop and use their own forms.  The endorsement is provided, along with the Certificate of Insurance, to the Additional Insured.

We pride ourselves on being customer service orientated. Certificates are prioritized, and our clients can even submit requests via our website for Certificates of Insurance.