Understanding the difference between adding an additional insured and additional named insured to your policy to best protect yourself is useful however it can be complex depending on your specific scenario. Gougeon Insurance Brokers have put together a certificate of insurance checklist to help you make a more informed decision. You can download here – Certificate of Insurance Checklist.
Adding an additional insured to a policy means that the insurance provider has agreed to accept the added third party and giving them the rights under the insured’s policy. The additional insured is only insured under claims that arise out of operations performed by or on behalf of the additional insured.
This differs from the rights of an Additional Named Insured as by contrast the insurance provider of the Insured, by adding a third party as an Additional Named Insured, has extended coverage and rights of the policy to all operations of that entity.
In either case these Additional Insured or Additional Named Insured are entitled to the same right of defense in a suit seeking damages that the Insured would be entitled to.
The significant difference between additional insured and additional named insured is the limitation of coverage to liability rising out of operations performed by or on behalf of the Additional Insured versus the more blanket and extensive rights given an Additional Named Insured, who now receives the same status and benefits from that policy as those of the Insured.
Often 3rd parties can request to be added as an additional “named” insured to you policy when such protection is not appropriate and affords them protection which is over and above what they should be afforded. It is recommended that you carefully review both types of requests and that you do not grant any 3rd party additional named insured status without an in depth review as you are granted them significant rights on your insurance policy.
To better understand this process and to get you started in the right direction, please download our free certificate of insurance checklist.