What is an additional insured under an insurance policy?

Written by stacey schifferdecker
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What is an additional insured under an insurance policy?
Property owners having a home built on their property may want to be listed as additional insured on the construction company's insurance policy. (Image by Flickr.com, courtesy of Nik)

Liability and property insurance protects policyholders from such diverse acts as a fire in a warehouse or a visitor slipping on a construction site. However, sometimes other parties also need the protection of this insurance policy.

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Definition

An additional insured is a person or company other than the named insured listed on an insurance policy, who is protected under the terms of the policy. For example, a mortgage company might be an additional insured on a homeowners policy, and a homeowner having a home constructed could be an additional insured on the construction company's policy.

Auto Liability

Most auto liability policies automatically provide additional insured status to anyone driving a vehicle with the owner's permission. The driver is thus covered under the vehicle's auto insurance.

Additional Named Insured

A person listed as the named insured on an insurance policy is the owner of that policy. An additional insured party does not own the policy but is covered by the policy. Parties also can be listed as additional named insureds, which means they can be held financially responsible for the policy if the first named insured doesn't pay the premiums.

Certificate Holder Status

Anyone listed as an additional insured on an insurance policy should request Certificate Holder Status. Otherwise, the insurance company will not inform the additional insured if the policy is canceled.

Additional Insured vs. Loss Payee

People or companies can be listed as additional insureds on liability or property policies in which they have a financial interest or a liability risk. A loss payee, on the other hand, typically does not have a liability risk but does have a financial interest. An example of a loss payee is a lien holder on equipment.

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