The word “Additional Insured” refers to liability insurance, which includes policies such as general liability and vehicle insurance. It means you’re giving your insurance benefits to a third party with whom you’re doing business, and it’s a term that’s often used (and, in some situations, contractually required) by businesses.
Workers’ compensation, on the other hand, does not apply because work comp can only cover your direct employees.
Contractors and subcontractors frequently need to name an additional insured.
How do I add an additional insured?
Consult an Insureon insurance representative to analyze the policy, determine whether an additional insured can be added, and determine the level of coverage the extra insured is requesting. In most cases, you’ll need to complete an additional insured endorsement form. Because there are so many forms to choose from, be sure to ask your agent for help.
Your agent can tell you what limitations apply to the extra insured and can answer any other policy-related questions you have. When it comes time to renew the policy or make other adjustments, if the additional insured is protected for the life of the policy, you may merely want to check in and make sure nothing has changed.
Finally, you can add subcontractors as extra insureds, although you may wish to require them to carry their own insurance as well. Because each policy is unique, the level of protection provided to an additional insured varies.
What is an additional insured on a COI?
An additional insured is a person who benefits from another’s policy’s coverage, including the ability to file claims under the policy. A certificate holder might ask to be included as an additional insured on the policy of the policyholder, and this will appear in the COI.
Do you need to add an additional insured to your policy?
There are a variety of reasons why different industries wish to be added as extra insured. Take a look at some of the examples below.
Janitorial and floor waxing services can create conditions where people may slip or fall as a result of their job. A structure or business that hires cleaners may need to be added as an additional insured on the cleaner’s general liability insurance. If someone were to fall while you were cleaning, the additional insured might be covered under the cleaner’s policy.
Due to the numerous risks inherent in construction contracts, it is typical to add extra insureds to general liability coverage. Developers, building managers, and other clients want to be covered in the event of common construction claims like bodily injury or property damage.
In turn, a general contractor who employs other contractors to do work will wish to be added as an additional insured so that if the contractor is accountable for damages, the contractor’s policy will provide some protection.
Some fitness professionals are self-employed individuals who provide services such as personal training or yoga instruction and are not full-time employees of a gym or studio.
Gyms and studios would usually require general liability and professional liability insurance before hiring these contractors. They’ll also request to be included as an additional insured so that they’re covered if their contractor is found liable for fitness-related injuries or negligence.
Hair stylists are frequently self-employed and rent a booth at a salon to conduct business. While their work may not appear to be as dangerous as previous examples, they can still be held liable if someone’s hair is damaged or someone trips over power lines. Salon owners may require stylists to carry their own general and professional liability insurance, as well as having their booth renters add them as an additional insured.
Although the accounting profession may not have the same evident bodily injury or property damage obligations as other professions, the risk resides in the services they provide. A sequence of mistakes or miscalculations can result in significant fines, fees, and taxes for a client.
Some clients will demand that their accountants have errors and omissions coverage (the same as professional liability). They may also request to be added as an additional insured if they must defend themselves due to a mistake made by their accountant.
Commercial property owners and managers may wish to be named as an additional insured on their tenants’ insurance policies. Their tenants’ insurance can assist protect them if a tenant damages their building or injures a visitor or a customer of one of their tenants.
Alternatively, real estate brokers may request that an agent add them as an additional insured on commercial auto insurance. The broker has some protection if the real estate agent is accountable for damages and is involved in an accident while showing properties.
Does it cost to add someone as additional insured?
The designated insured is responsible for adding an additional insured. Individuals or businesses interested in being listed as AI should specify this in their contract. The named insured would need to contact their insurance provider to add an extra insured to a commercial general liability insurance policy. Because AI endorsements are a typical part of doing business, most suppliers make the procedure quite simple. The name and address of the individual or entity that the named insured wishes to add are usually all that is needed to add the extra insured.
The cost of adding a party as an additional insured varies by insurance company, however it might be as low as $50. Some insurers will even charge a flat fee for the option to add as many additional insureds as the policyholder desires. Aside from the price of adding the endorsement, an extra insured will have an impact on the policyholder’s rates. The difference in premium will be determined by the nature of the endorsement, therefore it’s critical to communicate with your insurance provider to determine the precise overall expenses of adding an extra insured.
Who should be listed as an additional insured?
Additional Named Insureds could include principal owners of the Named Insured entity, subsidiaries, and possibly joint ventures in which the Named Insured controls 50% or more of the voting shares.
What is the difference between a named insured and an additional insured?
While it is true that an additional insured is protected, the coverage is limited. The most significant distinction between the ideas of named insured and extra insured is this. A named insured is always covered, whereas an additional insured is only covered to a limited extent. Only incidents that are directly related to the primary policyholder’s work and obligations are covered for them.
If that seems difficult, consider the following scenario. If you’re a spinning teacher who wants to teach a class at a local gym, you’ll probably need to add the gym as an additional insured to your liability policy. This safeguards the gym against any mishaps that may occur during your lesson. You are not, however, accountable for anything else that occurs in the gym. As a result, the scope of your coverage for the gym as an additional insured is restricted by your activities and presence. The same logic applies to all occupations, including DJs, electricians, and barbers. The additional insured isn’t covered if the injury or damage isn’t attributable to you as the primary insured.
In addition, each party is added to a policy in a different way. The named insured is, of course, named on the contract from the beginning. The additional insured, on the other hand, is only added when the need arises. Similarly, they may or may not be covered by the policy.
When should I request additional insured status?
When a client is exposed to prospective litigation suits based on the work of the named insured, additional insured status is frequently requested. A General Contractor who engages an Architect to design a home will almost always need Additional Insured status on the Architect’s Professional Liability insurance.
What are the two main types of additional insured endorsements?
Contracts document the particular promises made by the parties. Contract discussions can be time-consuming, difficult, and irritating at best. Contracts for construction are no different. The type and amount of insurance necessary for a building project is one of the pledges that the parties make to each other. Contractors on a project will be required to list the project owner as an additional insured on their casualty insurance policy (excluding workers’ compensation). Subcontractors will be required to do the same by general contractors. It is critical that both project owners and contractors, referred known as “the parties,” comprehend the additional insured endorsements’ coverage. It’s also crucial for the parties to understand what limitations or conditions these endorsements have.
Additional Insureds
For a variety of reasons, project owners want to be added as an additional insured on a contractor’s casualty program, including but not limited to:
- A third party may claim that the project owner is responsible for the activities of a contractor working on the project. Consider the case of a project contractor who is erecting scaffolding over a sidewalk. Pedestrians are allowed to pass through the scaffolding. Three pedestrians are injured when the scaffolding collapses. The pedestrians have filed a lawsuit against the contractor and the project owner. The scaffolding was not erected by the project owner, and the contractor was not told how to install it. Despite this, the project owner is accused of being held vicariously accountable for the contractor’s activities.
- There are indemnity clauses in commercial contracts. An indemnification clause is a condition in a contract that compels one or both parties to pledge to compensate the other for any loss, harm, or responsibility coming from the contract. Indemnification clauses are included in contracts by project owners. Because the project owner is unsure whether the contractor will have the cash without insurance, the project owner requires insurance to assist fund the contractor’s commitment to pay.
- Some project owners prefer to transfer some (or all) of their risk to the contractor’s insurance policy. The capacity to delegate this type of risk to a contractor varies by state.
Project owners demand additional insured status and other insurance coverage on a contractor’s casualty program for these and other reasons. Contractors will also be required to provide equivalent coverage to contractors in lower categories.
Additional Insured Endorsements
In the insurance industry, there are many different forms of supplementary covered endorsements. However, the focus of this paper will be on four popular ISO supplementary insured endorsements for contractors’ commercial general liability policies. Despite the fact that the endorsements stated are widely available, insurance firms may decide to give their own version of these endorsements. The following are some of the extra insured endorsements that will be discussed:
- Scheduled Person or Organization – Additional Insured Owners, Lessees, or Contractors (CG2010 4/13)
- Completed Operations – Additional Insured Owners, Lessees, or Contractors (CG2037 4/13)
- When required in a construction agreement with you, Additional Insured Owners, Lessees, or Contractors Automatic Status (CG2033 4/13)
- When required in a written construction agreement, Additional Insured Owners, Lessees, or Contractors Automatic Status For Other Parties (CG2038 4/13)
Specific information on the additional insured and the project is required for the first two ISO endorsements. The third and fourth ISO endorsements are “blanket” additional insured endorsements, meaning they don’t require specific information about the additional insured or project information to be included. Instead, they demand the existence of a written contract requiring the additional insured status. In this essay, we’ll refer to the endorsement form numbers.
CG2010 4/13
Since the 1980s, this support has shifted dramatically, and not for the better. The following are some of the key features of the CG2010 supplementary insured endorsement:
- The additional insured (for example, the project owner or general contractor) is not covered if they are solely responsible for their own negligence. Before the extra insured can seek compensation under this endorsement, the insured/contractor must be liable in whole or in part for a loss.
- The additional insured is only covered for active operations. In other words, this supplementary insurance endorsement expires after the contractor’s work on the project is completed. Any future purported claims by the extra insured under this endorsement must have occurred while the insured/contractor was working on the project.
- Coverage under the endorsement is only allowed to the degree that it is permissible under the law (which can vary by state).
- The endorsement does not necessitate the existence of a written contract requiring this enhanced insured status.
- If a contract exists, however, the coverage offered by this endorsement will not be more than the contract’s requirements. Furthermore, the endorsement will pay the smaller of the contract’s required amount OR the policy limit.
While the coverage may be fairly comprehensive and advantageous to the additional insured, the endorsement is full of terms, limitations, and exclusions. A savvy project owner or general contractor may try to circumvent these criteria and limitations by informing the contractor that they are not permissible. However, most insurance companies are unlikely to (or even able to) change the endorsement. As a result, all the project owner or general contractor has accomplished is potentially putting the contractor in a breach of contract situation since he or she is unable to meet the demand.
CG2037 4/13
This endorsement has the same limitations and conditions as the CG2010, with the exception that it covers the additional insured for the contractor’s finished operations rather than ongoing operations. This endorsement is in addition to the CG2010.
As a result, if an extra insured requests additional insured status for a project, the contractor will need BOTH the CG2010 and CG2037 endorsements to comply.
ABC University, for example, is seeking contractor bids to construct a new student facility. ABC University requests that each contractor on the project adds ABC University as an additional insured on the commercial general liability policy, which will cover ABC University both during and after the construction phase. In this case, the CG2010 (or its equivalent) would be necessary to insure ongoing operations as well as the CG2037 (or its equivalent) for completed operations once the work was finished.
CG2033 4/13
The following limitations and conditions apply to this additional insured endorsement, which is a blanket additional insured endorsement:
- The additional insured (for example, the project owner or general contractor) is not covered if they are solely responsible for their actions. Before the extra insured can seek compensation under this endorsement, the insured/contractor must be liable in whole or in part for a loss.
- The additional insured is only covered for active operations. In other words, this additional insured endorsement expires after the insured/work contractor’s on the project is completed. Any future asserted claims by the additional insured must have occurred while the insured/contractor was working on the project.
- When a party’s additional insured status is required by a written contract, the additional insured status is automatically granted. The designated party who enters into a contract with the contractor receives additional insured status.
- The coverage provided by this endorsement will not exceed the contract’s requirements. Furthermore, the endorsement will pay the smaller of the contract’s required amount OR the policy limit.
Despite the fact that an endorsement automatically covers additional insureds, there are still a number of conditions, limitations, and exclusions. Furthermore, because this endorsement excludes finished surgeries, a second endorsement is required to cover completed operations for the extra insured.
CG2038 4/13
This endorsement looks a lot like CG2033. The most significant distinction between these two endorsements is that CG2038 pertains to a party or parties requesting supplementary insured status within a construction agreement who are not the original contracting parties with the contractor. In other words, the parties are mentioned in the building contract but not precisely named. “Upstream parties” refers to these “quiet” celebrations. Additional insurance coverage for these upstream parties, such the CG2033, is only for ongoing operations. As a result, if the contract requires it, a second endorsement should be provided that covers finished operations.
Conclusion
Additional insured endorsements are not as broad as they were years ago, whether they are issued by ISO or by insurance firms using their own equivalent endorsements. Limitations, conditions, and other exclusions are included in these endorsements that were not previously included. Project owners may ask for more coverage in their construction contracts than can currently be provided through supplementary insured endorsements. As a result, the contractor may not always be able to secure the desired insurance coverage, producing irritation for both parties. It is critical for all contractual parties to be aware of the additional insured endorsements available in the market and to manage their expectations accordingly.
What does additional insured mean VS certificate holder?
Certificate holders have proof of commercial general liability insurance, whereas extra insureds are people who have been covered in addition to the original policyholders.
Do you want to add another person to your policy as a secondary insured?
They do, however, own the property and have an insurable interest in it. Many ask you to present a certificate of insurance as the property owner to verify that it is protected.
When they say they’d like to be added as an additional insured, they’re probably referring to you adding them as an additional interest. This is the finest course of action for you. This implies that if you let your coverage lapse or make modifications, he or she will be notified.
If you do add your landlord as an additional insured, be cautious. Any claim made by your landlord becomes a claim on your claim history, not the claim history of your landlord.