The "Legal-Ease" Glossary
This refers to anyone besides a policyholder who is covered by an insurance policy. As a rule, additional insureds enjoy less protection than the policyholder, but their status does afford them 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, they can rely on your policy to 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 require to be added as an additional insured on their tenant’s policy). Keep in mind that you can’t add an additional insured to your Professional Liability Insurance coverage, though.
That may seem like a lot to take in, so let’s break it down. Say you own an office building, and you hire a janitorial services company to clean the place to shine like the top of the Chrysler Building. The janitorial company can be held liable for visitors slipping and falling on freshly mopped floors, so the contractor may require that you add them as an "additional insured" on your General Liability Insurance policy. (Check out the definition of General Liability Insurance here.) That way, if they are sued for bodily injuries that happen on your premises, your policy can protect them.
Depending on your industry, this may be a fairly commonplace practice. Usually, if you have a close relationship with another business entity, they may require in their contracts that they have protection under your policy. For instance, your clients, 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 a little protection yourself.
Each policy is different, so the extent of protection an additional insured receives is variable. Typically, they may not receive as much coverage as the primary policyholder. Sometimes, the coverage will be limited to certain events, or it may only protect the additional insured for a set amount of time.
If you have questions about adding an additional insured to your policy, be sure to talk to your insurance agent.
Learn more about additional insured endorsements by reading our blog post "What Is an Additional Insured?"
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