When you’re checking your policy, you might notice the term additional insured Whether this is your first car insurance policy or not, it’s important to understand what this term means so that you can decide whether it’s something you want to commit to. Below, we explore what an additional insured endorsement is for auto insurance.
Additional insured explained
Many people want to know what an additional insured is or how an additional insured and a named insured differ. An additional insured is a person who has partial ownership of the vehicle or is liable for the vehicle that is insured by the policyholder. Thus, a person who is listed as an additional insured on an insurance contract is usually the co-owner of the car or is someone who is driving a vehicle that is owned by someone else, i.e. the policyholder.
It is important to note that naming a listed driver or a secondary driver on a car insurance plan is not the same as an additional insured. Additional insured are entitled to extra compensation compared to a secondary driver.
Additional insured vs. secondary driver
We want to reiterate that an additional insured is not the same as a listed or secondary driver. Thus, you should not assume that you will be compensated for a loss or damage just because you are listed on someone else’s auto insurance policy. The reality is that only additional insureds, named insureds, and loss payees are entitled to compensation from an insurance claim.
Another key difference between additional insureds and secondary drivers is that additional insureds almost always have ownership of one or more of the vehicles listed on the policy. However, they may not necessarily drive the car, depending on whether they are listed as a driver on another insurance policy. Meanwhile, a listed driver may not have any ownership over the car in question. For instance, they could be the adult child of the policyholder, and they just borrow the car occasionally.
Who can receive additional insured status in car insurance?
One type of change that can be made to a car insurance policy is an additional insured being added to a plan. But who can receive additional insured status for car insurance? Since additional insureds usually have partial ownership over the vehicle, the person who gets added usually depends on the ownership status of the car:
Co-titled vehicles
Co-titled vehicles are the first situation where an additional insured may apply. Insurance for co-titled cars usually includes an additional insured, especially if the two people on the title to the vehicle are not legally married or are listed as named insureds together. For instance, your father, who lives in a different household, might be listed as an additional insured on your policy if they co-signed on an auto loan with you. Assuming your father has his own car and doesn’t plan to drive yours regularly, they can be listed as an additional insured but not as a driver. Please note that if you took out a joint car loan to pay for the vehicle and it got totalled in an accident, both the primary policyholder and the additional insured would be entitled to compensation after the loss, assuming both parties owed the lender less than the actual cash value of the car.
Leased vehicles
Another party who can receive additional insured status on a car insurance policy is a leasing company. If you lease your car, then the leasing company will almost always be listed as both an additional insured and a loss payee. With a leased car, the leasing company functions as both the lender and the owner of the car. Therefore, in the event of a total loss, they would receive compensation via the insurance claim.
The importance of listing an additional insured when appropriate
Listing an additional insured on your car insurance plan is important, especially since they are included in claims payouts from the insurance company. In the event of a claim, the additional insured’s name would also be listed on the claims check since they are a part-owner of the insured vehicle.
Further, as an additional insured, they will be notified if any changes are made to the car insurance plan. For example, if the insurance company cancels your policy, the additional insured will be updated. Similarly, if other aspects of the contract between the insurer and the insured changed, such as if a certain type of coverage were added or removed, the additional insured would also be informed.
When should an additional insured endorsement be removed from a car insurance policy?
An additional insured endorsement should only be removed from a car insurance policy if that person is removed from the title of the car. As soon as the person’s name is removed from the title of the car, they should be removed from your insurance policy. Otherwise, they could be entitled to compensation in the event of a loss even if they no longer have an ownership stake in your car. In most cases, an additional insured like a leasing company will have no reason to remain on a person’s car insurance plan once the vehicle has been sold or the least has been paid in full. Please note that having an additional insured endorsement on a car insurance policy can delay the transfer of the car’s title if it is not removed first.
Where is an additional insured listed on a car insurance plan?
Additional insureds are usually listed on the declarations page of a car insurance plan, so if you flip to this page in your policy, you should find the details of your additional insured, should you have one. . If you are having trouble locating this section of your policy or you are unsure whether an additional insured has been added to your policy, reach out to a BrokerLink insurance advisor right away. One of our licensed brokers would be pleased to review your policy and confirm whether an additional insured is listed on it. We can also advise you as to whether an additional insured should be named.
Should I add my spouse as an additional insured to my car insurance plan?
If you share a vehicle with your partner or spouse, then the concept of additional insured may be relevant to you. Typically, you will have two options, and one of them is additional insured so long as both your names are on the title to the vehicle. Let’s explore each option below:
You and your spouse co-own the vehicle
If you and your spouse not only share the vehicle but co-own it, i.e., both of your names are on the title of the car, then the person who is not the primary policyholder can be added as an additional insured to the policy.
Please note that adding your spouse as an additional insured to your car insurance plan is only possible if they are a part owner of the vehicle. If your spouse is not a registered owner of the vehicle, they cannot be listed as an additional insured or a named insured. Remember that an auto insurance policy is a contract, so any insured names listed on the policy are contractually and legally required to fulfill the obligations set out in the contract, including all insurance payments.
If they are eligible and you choose to add your spouse as an additional insured to your car insurance plan, the two of you will possess the same rights under the contract. In other words, both parties are able to make changes to the contract, renew or cancel the policy, file claims, and collect claims payouts. Both parties are also held equally responsible for ensuring all premium payments are made.
In addition, when listing an additional insured on your policy, which is also a driver, such as a spouse with whom you share the vehicle, the insurance company will assess both of your risk levels. The premium that is calculated will be based on factors related to both parties, like the age, claims histories, driving records, and genders of both drivers.
You own the vehicle but your spouse does not
If you are the sole owner of the vehicle, i.e. your spouse has no ownership over the vehicle, then you will not be able to add them as an additional insured. Instead, one partner, the car’s owner, will be listed as the primary policyholder. If you and your spouse share the vehicle, then your spouse can be added as a secondary driver. Please note that a primary policyholder is the person who drives the vehicle the majority of the time. Meanwhile, the secondary driver is a person who drives the car regularly but not as much as the primary driver.
In order for your spouse to be added as a secondary driver on your policy, you will need to speak with your insurance company or broker. They will help you list this second person on your policy. Anytime you add another driver to your car insurance plan, whether they are also an additional insured or not, their risk level will be assessed, and your rates will be impacted.
Generally speaking, the more drivers you add to a plan, the more expensive your rates will be as you require more coverage. For this reason, you must provide ample information about the secondary driver you wish to add, including their age, driver’s licence, driving record, claims history, and more.
Once added, your existing coverage will extend to the secondary driver. Although the secondary driver is within their rights to operate the vehicle, they do not have the power to modify, renew, or cancel the policy or file claims with your insurance provider, unlike an additional insured. In addition, they are not responsible for paying the premium. The premium is the sole responsibility of the primary policyholder. The secondary driver is also not entitled to any compensation in the event of a claim.
Get in touch with BrokerLink to find out more about additional insured coverage
If you still have questions about how additional insured works, get in touch with BrokerLink today. We know all about additional insureds, as well as named insureds and loss payees. We also see how these types of roles apply to various types of insurance, including home insurance and insurance policies for businesses.
If you have general questions about insurance, don't hesitate to reach out to BrokerLink. For example, we have a team of car insurance experts who can help you find any type of auto insurance you’re looking for, such as:
In addition, our team is always happy to provide free quotes to our customers. Whether you're looking for a car insurance quote or a business insurance quote, don’t hesitate to give us a call or use the online quote tool on our website today.
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