Who Should Be Listed as Additional Insured?

While a standard insurance policy protects the named policyholder, situations often require extending this protection to other parties. This extended coverage is achieved by listing them as an “additional insured” on the policy.

Defining Additional Insured Status

An “additional insured” refers to an individual or organization, other than the primary policyholder, who benefits from coverage under an existing insurance policy. This protection is typically granted through an endorsement added to the named insured’s policy. The coverage provided to an additional insured is usually limited, applying specifically to liability arising from the named insured’s operations or premises. This arrangement differs from being a “named insured,” who is the primary party covered and has full rights and responsibilities under the policy.

The purpose of listing someone as an additional insured is to transfer risk from that party to the named insured’s policy. If a claim arises due to the named insured’s actions or negligence, the additional insured can seek defense and indemnity under the named insured’s policy rather than their own. This arrangement helps prevent costly disputes and clarifies liability responsibilities.

Key Relationships Requiring Additional Insured Status

Additional insured status is commonly required in many professional and contractual relationships to manage shared liabilities.

Landlord and Tenant

Landlords often require tenants to list them as additional insureds on their general liability policy. This protects the landlord if someone is injured on the premises due to the tenant’s operations or negligence, ensuring the landlord is not solely responsible for such claims.

Construction Industry

General contractors frequently require subcontractors to name them as additional insureds. This provides protection to the general contractor against claims arising from the subcontractor’s work, such as property damage or bodily injury. Subcontractors may also request to be listed on the general contractor’s policy for specific project-related exposures.

Financial Institutions

Financial institutions, such as lenders and mortgagees, commonly require additional insured status when providing loans secured by property or equipment. A bank issuing a mortgage, for example, will want to be listed on the property owner’s insurance policy. This ensures the bank’s financial interest in the collateral is protected in the event of damage or loss.

Event Organizers

Entities organizing events often require third-party vendors, performers, or exhibitors to list them as additional insureds. If a concert venue hosts an independent band, the venue will typically insist on being added to the band’s liability policy. This protects the venue from liabilities arising from the band’s performance or setup, mitigating its exposure to risks introduced by external parties.

Service Providers

Service providers working for clients may be asked to add their clients as additional insureds on their policies. A cleaning company, for instance, might be required to list the office owner as an additional insured. This protects the client from claims arising from the cleaning company’s operations, such as damage to property or injury to an employee.

Property Management and Franchisors

Property management companies routinely require property owners to list them as additional insureds on the property’s insurance policies. This protects the management company from claims arising from their management activities. Similarly, franchisors often require their franchisees to name them as additional insureds on their general liability policies, providing protection from liabilities stemming from individual franchise operations.

Understanding Additional Insured Coverage

The coverage extended to an additional insured is “derivative,” meaning it flows from the named insured’s policy and is contingent upon the named insured’s operations or negligence. This implies the additional insured receives protection only for liabilities directly connected to the named insured’s activities or premises. For example, if a contractor lists a property owner as an additional insured, the owner is covered for claims resulting from the contractor’s work, not for unrelated issues with the property.

Common claims covered for an additional insured include bodily injury and property damage arising from the named insured’s negligence. If a tenant’s operations cause a slip-and-fall accident, the landlord, as an additional insured, would be covered under the tenant’s policy. However, additional insured status does not extend to covering the additional insured’s own independent negligence or actions. If the landlord’s faulty maintenance caused the accident, the tenant’s policy would not cover the landlord for that liability.

Insurance policies specify if coverage for the additional insured is “primary and non-contributory.” Primary coverage means the named insured’s policy pays for a covered claim before any other insurance policies held by the additional insured. Non-contributory means the additional insured’s own policy will not contribute to the loss. This arrangement ensures the named insured’s policy is the first line of defense.

Obtaining Additional Insured Status

Securing additional insured status involves a formal request and the addition of a specific endorsement to an existing insurance policy. The party requiring the status, such as a landlord or general contractor, makes a formal request to the party providing the coverage. This request occurs as part of a contractual agreement, stipulating the type of coverage and limits required.

Upon receiving such a request, the named insured contacts their insurance agent or carrier. They provide the necessary information about the entity to be added as an additional insured. This information includes the full legal name, address, and a clear description of the operations or premises related to the desired coverage. The insurer then processes this request by adding an “additional insured endorsement” to the named insured’s policy.

Once the endorsement is in place, the named insured provides a Certificate of Insurance (COI) to the additional insured. A COI is a standard document summarizing the key details of an insurance policy. It indicates the named insured, coverage types, policy limits, effective dates, and lists the additional insureds. While a COI serves as proof of insurance, it is a summary and not the policy itself.

The additional insured should review the actual endorsement, not just the COI. The endorsement document contains the precise language and specific conditions under which coverage is granted. This confirms the scope of coverage aligns with the underlying contract.