What is an Additional Insured?

Additional insured endorsements can be a confusing part of insurance policies. To learn what an additional insured endorsement is, you first need to understand the full additional insured meaning and how it relates to other aspects of insurance. 

This guide will help you learn what additional insured endorsements are and when you need them for your business.

What does Additional Insured mean?

In insurance terms, additional insured refers to anyone other than the primary policyholder who is covered by the policy. Depending on the policy’s terms, the additional insured could be covered for a single event or the duration of the policy. Traditionally, additional insureds are added to your company’s general liability insurance coverage and will be eligible to receive the benefits of that policy. 

What is an Additional Insured Endorsement?

An additional insured endorsement is a change to your company’s general liability insurance policy that allows coverage to extend to other people who weren’t originally named on the policy. This endorsement allows the people named on it to make claims under the existing insurance policy. 

You can add both individuals and groups to your general liability insurance through an additional insured endorsement. 

It’s important to note that their protection will be more limited than yours as the policyholder. Of course, the specifics of these limitations will be based on your policy and the type of additional insured endorsement you file. 

Types of Additional Insured Endorsements

There are different types of additional insured endorsements, and it’s essential to understand them so you can add the right one to your policy. The specifics of your endorsement will depend on your individual policy, but they typically provide specific protection for certain circumstances. 

Defense Coverage

Additional insured endorsements may offer defense coverage for those named on the endorsement. Defense coverage means that your insurance policy can handle the claim when a third party sues someone listed as your additional insured. 

This coverage makes it so that the additional insured doesn’t have to pay for legal fees, court fees, settlement costs, or other related charges out of their own pocket. 

Coverage for Specified Third-Party Lawsuits

Your additional insured endorsement may be designed to cover certain types of claims. These claims usually include bodily injuries, property damage, or advertising injuries (meaning libel, slander, or copyright infringement). 

Depending on your industry, you may add your additional insured to your general liability policy, but some instances call for them to be included on property insurance as well. 

Blanket Additional Insured Endorsement

A blanket additional insured endorsement provides the same type of coverage for all additional insureds. A blanket endorsement doesn’t require you to name each additional insured by name. 

Instead, you will provide information on the types of groups to which you want to extend your coverage. For example, you can specify that your coverage will extend to the contractors under your employ versus naming every contractor specifically. 

Potential Limitations of Additional Insured Endorsements

Additional insured endorsements have some common limitations, which are worth knowing before you add one to your policy. The most seen limitations include the following:

• The endorsement may offer coverage for only certain types of liability. 
• Additional insureds can’t be added to a professional liability insurance policy. 

When do you need to add Additional Insured to a Policy?

In theory, you can add an additional insured endorsement to your general liability policy for any reason and to cover whoever you want to. However, some common situations lead to adding an endorsement. The two most common reasons are:

• Your client asks to be added to your insurance as an additional insured. 
• You hire a contractor and ask to be added as an additional insured to their policy. 

How to add an Additional Insured to your Insurance

To add an additional insured endorsement to your insurance policy, contact your general liability insurance provider and let them know what you need. Together, you’ll review your insurance policy and identify whether you can add the endorsement. 

If you can, they can help you determine the coverage needed based on what the additional insured is asking for. Your agent can send you the forms you need to fill out and explain the specific limitations that apply to your new additional insured once you add them. 

Additional Insured and Waiver of Subrogation

A waiver of subrogation is a contractual provision that waives the right for the insured’s insurance carrier to seek compensation for losses from a negligent third party. The idea behind this waiver is to provide additional protection for you as a client and minimize the potential for lawsuits in the event of a loss. 

Waivers of subrogation are intended to protect both you and your additional insureds from claims by the other. Whether you choose to have a mutual waiver between you and your additional insured or one that covers only you, it’s essential to have one along with your additional insured endorsement. 

The reasons you need a waiver of subrogation in addition to the endorsement include the following:

• Losses may fall outside the scope of your additional insured endorsement
• Losses may be over the limit in your contract
• The insurance policy may not cover the risk
• The loss is outside of the additional insured’s interest. 
• The additional insured isn’t included in an umbrella policy
• Your policy doesn’t permit additional insured status for claims
• Your state may have laws that don’t allow insurance for an additional insured’s sole negligence

Certificate Holder vs. Additional Insured

A certificate holder is a third party that you can name on your policy. However, a certificate holder isn’t covered by the policy and, therefore, is unable to file a claim under the policy. 

The primary purpose of a certificate is to verify your insurance coverage. Therefore, a certificate holder is someone who has a copy of your policy and receives notifications if your policy changes or is canceled. 

You may give a copy of your additional insured certificate to your landlord to verify your coverage, but that doesn’t mean your landlord is covered by your insurance policy. Your landlord would receive notifications of your policy renewals, changes, or cancellations, but they wouldn’t be able to file a claim under your coverage. 

On the other hand, the people named as additional insureds can file a claim under the coverage. 

Loss Payee vs. Additional Insured

A loss payee is a third party listed on your insurance policy that has first rights on payments from insurance claims filed after a property loss. 

For example, if you have a loan out on a delivery truck and that truck is totaled, the insurance payment would first go to the bank the loan is through (the loss payee), then you would receive the leftover funds. 

Both loss payees and additional insureds can receive benefits from your insurance policy. However, additional insureds receive general liability protection, while loss payees receive property damage coverage. 

Additional insureds can only receive benefits and payouts from claims they were directly involved in. Loss payees receive payouts if their property was involved in the claim. 

Can you add Additional Insured to a Workers’ Compensation Policy?

You can’t add additional insured endorsements to your workers’ compensation policy. 

Workers’ comp is for your company's employees and can’t be extended to an outside entity. Therefore, on a certificate of insurance, you'll find "N/A" (Not Applicable) indicated in the section typically reserved for additional insureds.

General liability, however, can be extended to an external entity through an additional insured endorsement. 

It’s common for contractors or other outside parties to ask to be added to your workers’ comp policy through an additional insured endorsement. However, they likely are asking for something different. 

If you’re approached by a contractor who asks for this, find out which of the following is what they’re looking for:

• They want to be added to your liability insurance, they just asked for the wrong thing. 
• They want to be added as a certificate holder. 
• They’re looking for a waiver of subrogation. 

If you’re still uncertain, reach out to your insurance provider for guidance.

Understanding the Essentials of Additional Insured Coverage

Additional insureds are individuals or groups who are added to your general liability insurance by filing an additional insured endorsement. This endorsement allows the people named on it to be covered by the existing insurance policy. 

Many people confuse additional insured with other insurance terms, such as loss payee, certificate holder, and waiver of subrogation. Understanding the differences between these terms will help you provide the right coverage for the contractors you hire. 

Remember that additional insured can’t be added to your workers’ comp insurance, as they cover different situations. Let Kickstand handle your workers’ comp and general liability insurance policies so all your coverage is under one roof. We can answer all your questions about both policy types and get you coverage that fits your company’s needs. Get your free quote today!