What is ADDITIONAL INSURED? What does ADDITIONAL INSURED mean? ADDITIONAL INSURED meaning – ADDITIONAL INSURED definition – ADDITIONAL INSURED explanation.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.
SUBSCRIBE to our Google Earth flights channel – https://www.youtube.com/channel/UC6UuCPh7GrXznZi0Hz2YQnQ
In US insurance policies, an additional insured is a person or organization that enjoys the benefits of being insured under an insurance policy, in addition to whoever originally purchased the insurance policy. The term generally applies within liability insurance and property insurance, but is an element of other policies as well. Most often it applies where the original named insured needs to provide insurance coverage to additional parties so that they enjoy protection from a new risk that arises out of the original named insured’s conduct or operations. An additional insured often gains this status by means of an endorsement added to the policy which either identifies the additional party by name or by a general description contained in a “blanket additional insured endorsement.”
For instance, in vehicle insurance a typical Personal Auto Policy will cover not only the original named insured that purchased the auto policy, but will also cover additional persons while they are driving the auto with permission of the named insured. This is a simple type of blanket additional insurance arrangement, because it does not identify the additional insured by name, but by a “blanket” general description that will automatically apply to many persons. Similarly, in liability insurance, all directors, officers, and employees of a named insured company will also enjoy the status of being an insured, so long as they are acting in their capacity of carrying out the business of the named insured company. These persons enjoy insured status only while they pursue the business of the named insured. If they deviate to pursue their own affairs, they lose this extension of coverage. This extension of coverage to people with a constant and close relationship to the named insured company is accomplished via the “Who Is An Insured” section of the liability policy. In other cases, the original named insured wishes to extend coverage to others who would not come within these standard categories. To extend coverage further, Additional Insured Endorsements are added to the policy.
The usual reasons for including other parties as additional insureds is due to the close relationship or legal requirements between the original named insured and the additional insured. In most cases it is beneficial for a party to be covered as an additional insured on the policies of other parties because this will reduce the loss history of the additional insured and lower its premiums. The losses will be posted against the policies of the party providing the additional insurance and their premiums will rise accordingly. Typically, a larger and more powerful business will require that smaller entities (desiring to do business) have the larger business named as an additional insured. For example, a landlord in a commercial building will often require that a tenant have the landlord named as an additional insured on the tenant’s insurance policies. In this manner, if there is an accident or loss on the tenant’s premises (such as a fall or a fire), then the landlord will enjoy the benefits of the tenant’s insurance coverage. Similarly, general contractors often require subcontractors to name the general and the owner on the subcontractor’s policies.