What’s the difference between Additional Insured and Additional Named Insured?”
The significant difference between Additional Insured and Additional Named Insured is the rights or amount of rights under the Insured’s policy that each is entitled to.
This one-word difference, namely the word “name”, makes a huge difference.
Let’s break this down, shall we?
Adding an Additional Insured to an insurance policy means that a third-party individual or entity is added to your existing policy for a specific duration and under specific conditions.
For example, if you were to rent out a hall for an office function, your company, “Focal Point Enterprises”, is the 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 (for a related blog, read FAQ Series: When Do I Really Need A Certificate of Insurance?). The coverage would only be valid for the duration of the office function at a prescribed limit of liability.
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 but instead adding an Additional Named Insured to the insurance policy (Note: This scenario is for comparison/educational purposes only):
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). Essentially, the insurance policy would now be under the Named Insured: “Focal Point Enterprises”, and “The Meeting Place”.
An Additional Insured and Additional Named Insured, however, are both entitled to the same right of defence, that the Insured is entitled to, in the event of a legal lawsuit seeking damages.
It is recommended that you carefully review both types of requests: adding an Additional Insured versus adding an Additional Named Insured to your insurance policy.