Insured: Personal Auto Policy Add-On

An additional insured is someone who has partial ownership of an auto or is liable for an auto that is insured by another party. This is usually the case when there are multiple people on the title of a car, and they are not all listed as named insureds. For example, if a grandparent cosigns on a car loan for their grandchild, they would be listed as an additional insured on the policy. This status can be achieved through an endorsement added to the policy, which either identifies the additional party by name or through a blanket additional insured endorsement, which uses a general description. It is important to note that a driver listed on the policy is not automatically considered an additional insured.

Additional insured vs. listed driver

An additional insured is a type of status associated with general liability insurance policies that provide coverage to other individuals or groups that were not initially named in the policy. With an additional insured endorsement, the additional insured will then be protected under the named insured's policy and can file a claim in the event that they are sued. This typically applies when the primary insured must provide coverage to additional parties for new risks that arise out of their connection to the named insured's conduct or operations.

A listed driver, on the other hand, is a person who resides with the named insured and/or regularly uses a shared vehicle. Their record is used to underwrite the policy to determine rates, but they have no policy rights. They are only covered on the vehicle they are listed under and are not responsible for premiums or able to make changes to the policy.

To illustrate the difference, consider the following example: Henry is the named insured on his auto insurance policy, and his daughter, Samantha, is a listed driver. If Henry lets his friend Mary, who is not a listed driver, borrow the car and she gets into an at-fault accident, she is still covered under his policy as a permissive user. In another scenario, if Samantha goes on vacation and borrows a car from her friend but is negligent and has a collision, she is still covered under her dad's policy because she is a family member and not because she is a listed driver.

In summary, an additional insured is someone who is added to an insurance policy to extend coverage beyond the named insured, while a listed driver is a person who is listed on the policy for underwriting purposes and is only covered when driving the vehicle they are listed under.

When to add an additional insured

An additional insured is someone who has partial ownership of an auto or is liable for an auto that is insured by another party. This is different from a listed driver, who may have no ownership of the auto and is not eligible for the compensation granted to an additional insured.

You might want to add an additional insured to your personal auto policy if they are a co-owner of the vehicle. For example, if you and your grandparent co-own a car, you would add them as an additional insured. If you are leasing a car, the lease company should be listed as the additional insured.

You should also add any regular drivers of your car to your insurance policy so that damages from accidents are covered. This includes any drivers that live at your permanent address, and most insurance companies will require this.

In the context of business insurance, an additional insured is often added when there is a close relationship or legal requirement between the original named insured and the additional insured. For example, a landlord may require a tenant to add them as an additional insured on their insurance policy. Similarly, a general contractor may require a subcontractor to add them as an additional insured on their policy. This provides protection for the general contractor if they are sued due to accidents arising from the work of the subcontractor.

When to remove an additional insured

There are several scenarios where you may need to remove an additional insured from your personal auto policy. One common situation is when you sell or transfer ownership of the insured vehicle. If you are no longer the owner of the car, you will need to remove the additional insured as the policy is specific to you and your vehicle. This is a legal requirement, and failing to do so can have consequences if the new owner needs to make a claim. It is important to update your policy as soon as possible to reflect this change in ownership and avoid any complications.

Another instance where removal may be necessary is when the relationship between you and the additional insured changes or ends. For example, if you divorce your spouse or dissolve a business partnership, you may want to remove them from your policy. In such cases, it is essential to review and update your insurance coverage to ensure it aligns with your current situation and needs. Keeping an ex-spouse or former business partner on your policy could result in unnecessary financial burden or liability.

In the unfortunate event of the death of the additional insured, you will also need to remove them from your policy. This is a sensitive matter, and it is important to handle it with care and attention to detail. Contact your insurance provider to inform them of the passing and request guidance on the necessary steps to update your policy accordingly. They may require official documentation, such as a death certificate, to process the removal.

It is also worth considering removal if the additional insured no longer drives the insured vehicle or their circumstances change. For example, if your adult child, who was listed as an additional driver, purchases their own car and insurance policy, you may want to remove them from your policy to avoid duplicate coverage and unnecessary costs. Similarly, if the additional insured moves away and no longer has access to or uses the insured vehicle, it makes sense to update your policy to reflect this change.

Remember, it is your responsibility to keep your insurance provider informed of any changes that may impact your policy. Review your policy regularly and contact your insurance agent or broker if you have any questions or concerns about adding or removing an additional insured. They can provide personalized advice and ensure that your coverage remains adequate and up-to-date.

The purpose of being listed as an additional insured

Being listed as an additional insured on an auto policy has several purposes and implications.

Firstly, it is important to understand who can be considered an additional insured. An additional insured is someone who has partial ownership of an automobile or is liable for an automobile that is insured by another party. This means that a driver listed on the policy is not automatically considered an additional insured. The additional insured may or may not drive the vehicle, but they must have ownership of at least one of the vehicles on the policy.

Being listed as an additional insured provides benefits such as defence coverage and protection from certain third-party lawsuits, including claims of bodily injury, property damage, and advertising injuries (e.g. libel or slander). It also ensures that the additional insured is notified of any changes made to the vehicle's insurance coverage, such as reductions in coverage, removal from the policy, or the addition or reduction of other coverages.

Additionally, being listed as an additional insured can be advantageous in terms of insurance payouts and premiums. Additional insureds are included in claim payouts and will receive compensation in the event of a total loss if they owe less than the actual cash value of the vehicle. Moreover, being covered as an additional insured can reduce the loss history of the additional insured, leading to lower premiums for them. Instead, any losses from claims will be posted against the policies of the primary insured, resulting in higher premiums for them.

It is worth noting that there are some limitations to being an additional insured. For instance, additional insureds cannot be added to a professional liability insurance policy, and they may only be covered for a specific event or the duration of the policy.

Who is added as an additional insured

An additional insured is a person or organisation that enjoys the benefits of being insured under an insurance policy, in addition to whoever originally purchased the insurance policy. This term generally applies within liability insurance and property insurance but can be an element of other policies as well.

An additional insured is typically added to a policy when the primary insured has to provide coverage for parties that would be at risk of being sued due to being connected to the primary insured's business or operations. This often occurs when there is a close relationship or legal requirement between the original named insured and the additional insured. For example, a landlord may be added to a tenant's coverage, or a contractor may be added to a subcontractor's coverage.

In the context of vehicle insurance, a Personal Auto Policy with additional insured provisions will cover not only the original named insured that purchased the auto policy but will also cover additional persons driving the auto with the permission of the named insured. This is a simple type of blanket additional insurance arrangement, as it does not identify the additional insured by name but by a "blanket" general description that will automatically apply to many persons.

In liability insurance, all directors, officers, and employees of a named insured company will also enjoy the status of being an insured person, as long as they are acting in their capacity of carrying out the business of the named insured company. If they deviate to pursue their own affairs, they lose this extension of coverage.

The cost of adding an additional insured is typically low compared to the costs of the premium, as insurance company underwriting departments often consider the additional risk associated with additional insureds as marginal.

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