Insurance jargon can be confusing and tricky. Especially when you are trying to compare online business insurance quotes, it is crucial to understand what specific terms mean.
For example, take one of the most asked questions: who can you add to your policy? Or what is the difference between a named insured and an additional insured? How does the latter vary from an additional named insured?
This post aims to clear such doubts.
This member is the main individual or company mentioned in your policy. This entity has invested in the business and is responsible for premium payments. Also, when a claim arises, the named insured will get all the protection offered in the coverage. Your insurer contacts the named insured regarding renewal notices, updates, etc.
If, in your daily operations, another company, individual, or professional can be held liable in a claim, you can add them as an additional insured.
Usually, it is done through an endorsement of the existing insurance policy. So, it will be an addition or an update, and it can restrict coverage. The additional insured will not receive the same coverage as the named or main insured.
Besides, it can be done in certain conditions and is only for a specific duration. They also don’t pay the premium or renew the policy.
Additional Named Insured
Additional named insureds have more extensive coverage than additional insureds; it is the same as the named insured. Their name will feature explicitly in the insurance policy, often as an addendum or at the end of the contract.
There is no prescribed limit of liability, which means they have protection until the time the policy is valid. They also receive all communication regarding policy changes, cancellations, or renewal. However, they don’t pay the premium.
How Do Additional Insured and Additional Named Insured Differ?
Distinguishing between these two terms can be difficult for someone new to insurance. It is better to ask your broker to explain when getting online business insurance quotes.
But let us see an easy example here:
If you are a subcontractor and you work with a builder, you can add the builder or owner as an added insured. In the case they are sued, they will have liability protection from claims arising due to any damages caused by your work. This is limited coverage and is only until this specific project completes.
On the other hand, if you add the owner or the builder as an additional named insured, they have 100% coverage. Typically, individuals and third-party entities like partners, co-owners, and affiliates are good candidates for additional named insureds.
In legal proceedings, an additional named insured is entitled to receive all the benefits as the named insured. Besides, if you have someone as an additional insured, they can sue you for third-party damages to property or bodily harm.
In some instances, you should be the additional insured or additional named insured on someone else’s insurance. So, it is better to learn about all the consequences by speaking to your insurance broker.