In an insurance policy, an additional insured refers to anyone other than the policyholder who is covered by an insurance policy. Coverage might be limited to a single event or it could last for the policy's lifetime.
What is an additional insured endorsement?
Both individuals and groups can be given additional insured status, but their protection is more limited than the policyholder’s. The specifics depend on the policy, but an additional insured endorsement typically affords some crucial protection, such as:
Defense coverage. When a third party (i.e., someone who doesn’t work for your business) sues your additional insured, your policy can address the claim. That way, legal defense fees, court fees, and settlement or judgment costs don’t come out of the additional insured’s pocket.
Coverage for certain third-party lawsuits. This includes claims of bodily injuries, property damage, and advertising injuries (e.g., libel, slander, or copyright infringement). Most often, additional insureds are added to general liability insurance policies, but in certain situations they may be added to property insurance policies (e.g., a landlord might request to be added as an additional insured on a tenant’s policy).
For example, say you own an office building, and you hire a janitorial services company for cleaning services. The janitorial company can be held liable for visitors slipping and falling on recently mopped floors. In contract negotiations, the company could require that you add it as an additional insured on the building’s general liability insurance policy. That way, if the company is sued over bodily injuries that happen on your premises, your policy can protect it.
Depending on your industry, this could be a fairly common practice. For instance, suppliers or subcontractors may benefit from additional insured status when they work on your premises or on behalf of your business. By contrast, if you subcontract with a company, you may demand additional insured protection for yourself.
How does a blanket additional insured endorsement differ?
An additional insured endorsement can be used to provide many different levels of coverage. A blanket additional insured endorsement provides the same coverage to all additional insureds. For example, on a commercial auto insurance policy, a blanket additional insured endorsement provides the same coverage for any driver of your company vehicle. It's a common feature of many liability policies.
When to add an additional insured to a policy
New clients or partners may ask to be included as additional insureds in your insurance policy before they will sign a contract. For the most part, clients and partners will let you know when they require additional insured status in order to work with you.
Though you could theoretically name an additional insured for whatever reason you want, these two scenarios are most common:
- You’re a contractor /subcontractor / business owner, and your client asks to be named as an additional insured on your policy.
- You hire a contractor/subcontractor, and you ask to be named as an additional insured on his policy.
You may ask to be named as an additional insured to provide your business with more liability coverage. For example, say you use a contractor on a project who causes an accident that leads to you being sued. If you’re an additional insured on the contractor’s policy, you can make a claim to pay for the damages and legal fees, rather than relying on your own insurance.
Most companies include language in their contracts for contractors to indemnify, or pay for, any liability lawsuits that stem from their work. Companies want assurance that contractors have the means to compensate them in a worst-case scenario, which is why they often ask for additional insured status, too.
How to add an additional insured to an insurance policy
To add an additional insured to an insurance policy, consult an Insureon insurance agent and review the policy, identify whether an additional insured can be added, and assess the level of coverage the additional insured is requesting. You’ll typically need to fill out an additional insured endorsement form. There are a large number of forms available, so make sure to ask your agent for assistance.
Your agent will let you know what limitations apply for the additional insured and can answer any other questions about the policy. If the additional insured is covered for the life of the policy, you may want to just check in and make sure nothing has changed when it’s time to renew the policy or make other changes.
Lastly, when it comes to subcontractors, you can add them as additional insureds, but you may also want to require them to carry their own insurance. Each policy is different, so the extent of protection an additional insured receives is variable.
Limitations of additional insured status
There are some notable limitations to additional insured coverage, such as:
- The endorsement may offer coverage for only a limited type of liability (e.g., vicarious liability).
- Additional insureds can’t be added to a professional liability insurance policy.
An insurance company will likely refuse to add a business’s client as an additional insured to a professional liability policy. It will argue that the client is not a licensed professional and therefore can’t be held to the standard of care of a licensed professional. That would preclude the client from being insured under the policy for acts of professional negligence or mistakes.
Certificates of insurance for additional insureds
Business partners, clients, and subcontractors can ask for proof of their additional insured status by requesting to see the policyholder’s certificate of liability insurance. This document lists the commercial policy and its insureds. If a business needs to use the additional insured protection, the certificate of liability insurance offers the necessary information to begin the claims process.
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