Additional insured versus named insured

At BrokerLink, our insurance specialists are ready and willing to answer all insurance and risk questions, especially when it comes to helping you navigate tricky insurance jargon. One frequently asked question we often get is: what is the difference between additional insured and additional named insured? We can help explain this.

What does “named insured” mean?

“Named insured” simply means that the individual or company is named on the insurance policy. This is usually stated on the first page. The named insured has a financial interest in the business. The named insured chooses the coverage, they are the main point of contact regarding insurance-related notices or changes, and they will be responsible for paying the premium.

What does “additional insured” mean?

An additional insured is an individual or company added to the insurance liability policy for a specific duration and under specific conditions. This addition is usually done by means of an endorsement, which can restrict coverage. (An endorsement is basically a change or addition to the coverage.) Additional insureds do not receive full coverage from the named insureds policy, and they are not responsible for paying premiums or the upkeep of the policy.

What does “additional named insured” mean?

An additional named insured has more rights than the additional insured, and therefore more extensive coverage. Like the named insured, the additional named insured is explicitly named in the policy, however the name usually appears further down in the contract or in an attached addendum. As a result, additional named insured will have the same rights as the named insured and will receive notice of policy cancellations or changes, however will not be responsible for paying the premium.

Additional insured vs additional named insured

Now that we understand what each term means, let’s explore the difference between them. One word, specifically the word “name”, makes all the difference. It refers to the rights or amount of rights under the named insured’s policy that each is entitled to.

For example, if you were to rent out a hall for an office function, your company, “Focal Point Enterprises”, is the named insured. Let’s call the hall, “The Meeting Place”. The Meeting Place has asked you for a certificate of insurance as they don’t want to take on the added exposure or liability of your office function. The Meeting Place would be added onto your insurance policy, just covering that specific function, and a certificate of insurance would be issued to prove that. The coverage would only be valid for the duration of the office function at a prescribed limit of liability. In this scenario, The Meeting Place is the additional insured.

Adding an additional named insured to a policy, by contrast, means that a third-party individual or entity is added to your existing insurance policy. This third party has rights to all coverages outlined in your policy.

Using the same example as above, here’s how you would add an additional named insured to the policy:

If The Meeting Place was added to your insurance coverage as an additional named insured, they would have right to all the coverages under your policy, not just liability coverage for one specific event (i.e., the office function). The insurance policy would now be under the named insured: “Focal Point Enterprises”, and “The Meeting Place”.

We’re here to help!

It can be difficult to differentiate between these two terms. We recommend that you review both types of requests carefully: adding an additional insured versus adding an additional named insured to your insurance policy.

If you want to learn more about these terms and how they can benefit you, it’s best to speak to an experienced insurance broker. BrokerLink is here to answer your questions and find the right insurance for you.

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Additional insured and additional named insured FAQs

Can an additional insured sue a named insured?

An additional insured can sue the named insured. An additional insured should confirm any businesses coming onto their property have their own liability coverage in place in the event there is bodily injury and/or property damage to a 3rd party as a result of the businesses employees and/or operations. Additional insured is usually added to a policy by way of an endorsement. Endorsements typically offer some crucial protection, including defence coverage and coverage for certain third-party lawsuits. This is why it is important to fully understand how you are covered when placed under someone else’s policy.

An additional insured and additional named insured are both entitled to the same right of defence as the insured is entitled to, in the event of a legal lawsuit seeking damages.

When should I request to be added as an additional insured to a policy?

Requesting to be added as an additional insured to a policy should occur when you’re in a circumstance in which in which a business or company is coming onto your property to perform their operations. For example, if you own a window washing company (ABC Windows) and have a contract to wash windows at all Home Depot locations, Home Depot would want to be sure they are listed as additional insured on ABC Window’s policy. That way, if Home Depot is sued for a 3rd party claim due to ABC Windows’ negligence, they can pass the responsibility on and have ABC Windows policy respond to the claim.

If you are not sure whether you should be added as an additional insured, contact your insurance broker, who will provide you with the advice you need to make the right decision.

Who should be listed as additional named insured?

An “Additional Named Insured” is usually an affiliate, partner or co-owner of the named insured.