Supplemental Insurance: Understanding The Added Layer Of Protection

In insurance policies, an additional insured is a person or organisation that is covered by an insurance policy in addition to the policyholder. This typically applies within liability insurance and property insurance, but it can also be an element of other policies. An additional insured endorsement is an amendment to the policy that either identifies the additional party by name or by a general description. This type of insurance is particularly useful for small businesses that want to work with larger businesses, as the larger business will often require the smaller one to add them as additional insured.

Additional insured endorsements can be added to property insurance policies

An additional insured endorsement is a form of extra liability coverage that protects others that live in your home but aren't included in your original policy. For example, if a guest gets injured in your home and decides to sue, you would be covered through your liability protection. However, someone who has a financial interest in your home but isn't included in your policy would be forced to pay for legal and medical fees out of pocket.

An additional insured endorsement can be added to your home insurance plan at any time, though it's recommended to do so when you first purchase your policy to ensure there are no gaps in coverage. The cost of adding an additional insured endorsement to your policy isn't very steep but depends on your insurer. Some insurers offer a flat rate for adding multiple additional insureds.

An additional insured endorsement is usually added to a pre-existing liability insurance policy, such as commercial general liability, professional liability, and commercial auto insurance policies. However, it's important to note that additional insured endorsements will always have limitations in coverage when compared to the coverage received from a stand-alone liability policy. Therefore, it's recommended to have a stand-alone policy to protect yourself.

The main benefit of an additional insured endorsement is that it will reduce the impact of the policy owner's loss history. This is because the additional insured status ensures that the financial responsibility of the claim is placed on the party most likely to be responsible for it.

Additional insureds can file a claim if sued

An additional insured endorsement is an amendment to an insurance policy that adds another insured party to the policy. This typically applies to general liability insurance policies, commercial property, or commercial auto policies. The additional insured party is protected under the named insurer's policy and can file a claim if they are sued.

An additional insured endorsement is usually added to a pre-existing liability insurance policy. This can include commercial general liability, professional liability, and commercial auto insurance policies. For example, a construction contractor working on a project that requires a subcontractor might add the subcontractor to their existing insurance policy as an additional insured. This protects both the contractor and the subcontractor in the event of a costly mistake that leads to a lawsuit.

The cost of adding an additional insured is typically low compared to the premium costs. However, the premium will increase with each additional insured that is added to the policy.

It is important to note that an additional insured endorsement does not provide the same level of coverage as a stand-alone insurance policy. Therefore, it is recommended that the additional insured party also has their own insurance policy to avoid potential gaps in coverage.

Adding an additional insured is a way of extending liability insurance coverage to another person or business

An additional insured is a person, group, or location that is added to a business insurance policy. This means that they are covered by the insurance policy in addition to the original policyholder. The additional insured is protected under the named insurer's policy and can file a claim if they are sued.

The cost of adding an additional insured is generally low compared to the cost of the original premium, and it may be required for leases and contracts. It is also beneficial in attracting contractors and business partners.

There are two main types of additional insured endorsements: a scheduled endorsement and a blanket endorsement. A scheduled endorsement names a specific individual or business as an additional insured, while a blanket endorsement provides the same coverage to multiple third parties without specifically naming them.

It is important to note that the protection offered to an additional insured is typically more limited than that of the policyholder. The specifics depend on the policy, but an additional insured endorsement usually provides crucial protection, such as defence coverage and coverage for certain third-party lawsuits.

Additional insureds are not covered by professional liability insurance policies

Adding insurance is a way of extending the named insured's coverage to other individuals, groups, or locations. Typically, an additional insured is added to a general liability insurance policy, commercial property, or commercial auto policy.

However, additional insureds cannot be added to a professional liability insurance policy. Professional liability insurance helps protect a business from lawsuits claiming mistakes in the professional services given. An insurance company will likely refuse to add a business's client as an additional insured to a professional liability policy. They will argue that the client is not a licensed professional and therefore cannot 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.

Additionally, your firm's client cannot be an additional insured on professional liability because they are not performing "professional services" and do not have the same risks as a design professional.

Furthermore, professional liability policies rarely have additional insured provisions, especially not "blanket" ones. This is because, given the specific nature of professional risk, those underwriting such a policy are unable to extend coverage to an entity whose risk exposure is unknown to them.

The cost of adding an additional insured is typically low

Adding an additional insured to your insurance policy is a common practice, especially in business insurance. An additional insured is a person, group, or location that is added to a business insurance policy that you have purchased. This extends the named insured's coverage to others.

There are several benefits to adding an additional insured. Firstly, it reduces the loss history of the additional insured, which can lead to lower premiums. Secondly, it provides legal defence coverage for third-party liabilities that the additional insured may face, including claims of bodily injury, property damage, or advertising injury.

There are a few key scenarios where you might want to add an additional insured to your policy:

• It is required by your landlord or contractually required.
• It is required by government permits and licensing requirements.
• To help attract talent or business partners.
• You have vicarious liability.

Frequently asked questions