Sometimes, business owners may need to extend their coverage to a third party or ensure another person’s or organization’s financial interests in a project or property are accounted for if damage or loss affects their investment or interest.
These are commonly referred to as additional interests or additional insureds.
Most insurance companies offer the flexibility to add a third party as an additional interest or additional insured, empowering policyholders to tailor their coverage to their specific needs.
Including an additional interest or additional insured to a business insurance policy are both ways to add a third party to a policy, but they each serve a different purpose for a third party.
Let’s explore what each one is.
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What Is an Additional Insured in a Business Insurance Policy?
An additional insured is a person, persons, or entity to whom you extend your insurance coverage. You may be required to have your insurance company add someone else’s name to your policy.
Additional insureds are typically added to a general liability insurance policy.
For example, a contractor may need to name a subcontractor on their policy, and a landlord might need to include a mortgage lender.
In either scenario, an additional insured endorsement provides a layer of security, protecting a third party from liability risks arising from the policyholder’s operations or safeguarding their interest in a property or project.
What Is an Additional Interest in a Business Insurance Policy?
An additional interest is a third party with a financial stake in a business or a property, but without ownership.
Additional interests are usually added to commercial property insurance or a commercial auto insurance policy.
For instance, a financial lender or bank that provides a policyholder with a loan may request to be named as an additional interest on a commercial property policy to ensure the policyholder’s coverage is active.
Additional interests are notified of policy changes and receive compensation following an insurable loss, such as a fire that damages a business property.
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