what is an additional insured?

Explaining Commercial Insurance Terms: Additional Insured

Learn what this term means when it comes to your commercial coverage.

When it comes to your business insurance in Plano, Texas, your policy may be filled with unfamiliar industry jargon. For instance, business owners may have heard the term “additional insured” tossed around without ever receiving a clear explanation of the word. For your convenience, here’s what additional insured refers to and what it means for you.

What is an additional insured?

In an insurance policy, an additional insured refers to anyone other than the policyholder who is covered. Individuals and groups can both receive additional insured status; however, it’s important to understand that their coverage is subject to certain limits. This is to say that, while additional insureds are covered under the policy, they do not have access to the full scope of coverages that the policyholder has.

What is covered?

Additional insureds generally have two major protections under your policy. The first type is defense coverage. This coverage kicks in when a third-party sues the additional insured. Defense coverage will address the cost of legal fees and settlement costs. Additional insureds also have coverage for certain third-party lawsuits. This means that they tend to have general liability coverage under your policy.

When do I name someone an additional insured?

New clients or partners may require you to list them as additional insureds before they sign a contract with you. While you can add someone as an additional insured whenever you please, this practice is most common among contractors and subcontractors. Once you have named someone as an additional insured, you will receive a certificate of insurance. This document serves as proof that the other party has additional insured status. Should the party need to access their additional insured coverage, the information they need to begin the claims process is on their certificate.

This is what you need to know about the term additional insured. Do you have further questions regarding your business insurance in Plano, Texas? If so, do not hesitate to contact us at Tri-Star Insurance/HUB International. Our dedicated team is ready to assist you with all your coverage needs today.