If you’ve ever had to get an insurance quote, whether it be for your home, car, or business, you may have heard the term ‘additional insured’ and not know what it means.

It is common for a client or landlord to request that you provide them with a ‘certificate of insurance‘, a proof-of-insurance document. They may ask you to add them to your policy as an additional insured. If they get sued because of work conducted by your business, your insurance policy will extend its coverage to protect them. 

Including an additional insured to your policy can be limited to a single event, or it could last for the duration of your existing policy (most business insurance policies are active for a full 12 months. You must renew your policy annually).

Here is a straightforward explanation that breaks down what it means for your insurance, why it is important to you, and how it all works:

what is an additional insured?

Understanding What an Additional Insured Endorsement Is

An additional insured is a person or persons or entity to whom you extend your insurance coverage. Sometimes, you may be required to have your insurance company add someone else’s name to your business insurance policy.

Additional insureds are entitled to limited benefits under the policy and are insured for their third-party liability arising from the conduct of the named insured or policyholder (in this case, the named insured, or policyholder is you: the person who is entitled to all the benefits of a business insurance policy).

Additional insureds are entitled to limited benefits under a policyholder’s business insurance policy and are insured for their third-party liability arising from the policyholder’s conduct.

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Here’s an example: let’s assume your policy includes coverages such as commercial general liability and commercial property insurance. You hire a professional cleaning services company to clean your office, warehouse, or business property. That cleaning business may ask to be added to your policy as an additional insured. Why? The cleaning company faces liability risks for its services, such as the risk of someone slipping on a freshly mopped floor, falling, and getting injured. If they are included as an additional insured on your policy, it extends the protection of your policy to them if they are sued by someone who slips on the wet floor and is hurt.

Additional Insured vs Additional Named Insured: What’s the Difference?

Is there a difference between an additional insured and an additional named insured? Indeed, there is. Let’s go over each:

Additional Insured

An additional insured is a third party added to your insurance policy using an endorsement. Your policy coverage affords additional insured liability protection related to the policyholder’s activities.

For instance, a general contractor might list a subcontractor they hire as an additional insured on their policy. If a claim is filed related to the subcontractor’s work, that liability is covered by the general contractor’s policy. In this instance, the subcontractor relies on the general contractor or policyholder to file or handle a claim.

Additional Named Insured

An additional named insured is a co-policyholder. That means they share the same rights and responsibilities as the initial policyholder, have the same level of coverage, and can initiate claims or make changes to the policy.

Let’s stick with construction for an example of how additional named insureds work. Think of a large construction project that a general contractor manages but with multiple subcontractors involved. 

The general contractor shares the liability exposures with the subcontractors by including the subcontractors as additional named insureds. If a claim arises due to one of the subcontractor’s work, the general contractor could be involved, too. But it also helps manage the project’s risks and coordinates how claims are handled, helping to avoid disputes over who’s responsible for a claim. Furthermore, in this scenario, including the subcontractors as additional named insureds can be more cost-effective than each subcontractor buying policies independently.

Does It Cost More to Add an Additional Insured to a Policy?

It depends on your insurance company. Some insurers may charge you to name an additional insured to your policy for about $50. There is no cost involved for the additional insured. An insurance company may also offer a policyholder to pay a one-time, flat rate to add as many additional insureds as they wish.

8 Types of Additional Insured Endorsements

Eight types of additional insureds can be added to your insurance policy. Here’s a rundown of what each one is:

1. Automatic Additional Insured Endorsement

An endorsement that automatically extends coverage to parties or individuals the policyholder is obligated to include in their policy.

2. Specific Named Additional Insured Endorsement

This endorsement specifically names the additional insureds on the policy. It’s used when the policyholder has a contractual agreement with a client that requires additional insured coverage.

3. Ongoing Operations Additional Insured Endorsement

This endorsement covers liabilities arising from the ongoing operations of the policyholder. It’s commonly used in construction when various contractors and subcontractors are involved.

4. Completed Operations Additional Insured Endorsement

An endorsement that covers additional insureds against claims arising after a project is completed.

5. Primary and Non-Contributory Additional Insured Endorsement

This type of endorsement modifies the terms of coverage extended to an additional insured by addressing the order in which insurance policies respond to a claim and ensuring the additional insured’s insurance remains unaffected or non-contributory until the primary policy’s coverage limits are exhausted.

6. Waiver of Subrogation Additional Insured Endorsement

An endorsement that prohibits an insurance company from seeking reimbursement or subrogation from an additional insured for claims covered by the policy.

7. Vendors Additional Insured Endorsement

When a business is the named insured and wants to extend coverage to vendors or suppliers providing goods or services to the company, this endorsement helps protect the business from liabilities arising from a vendor’s activities.

8. Managers or Lessors of Premises Additional Insured Endorsement

Typically used when a policyholder leases or manages a property. It covers managers or lessors of the premises, ensuring they are protected from claims arising from the policyholder’s operations on the premises.

There is no “one size fits all” solution to additional insured issues, and there are limitations to the coverage an additional insured may receive. Speak to a licensed Zensurance broker if you have questions.

How to Add an Additional Insured to Your Business Insurance

Here’s what’s required to add an additional insured to your policy: 

  • It usually takes one to two days to get an additional insured approved by your insurance company. For existing Zensurance customers, email support@zensurance.com, and we’ll facilitate getting the person or people you need to be added to your policy.
  • Include your company name.
  • The full legal name of the client or partner requesting the certificate. It is usually a business name ending with “Inc.” or “Ltd.”
  • Your client’s or partner’s mailing address.
  • Any specific requirements provided by your client or partner.

We will then prepare a revised certificate of insurance and send it to you.

If you’re looking for a new business insurance policy or wish to switch your coverage from your current provider, we can help. 

Fill out an online application to get a free quote. Our licensed brokers will shop the market to find you a low-cost policy through our network of more than 50 Canadian insurance providers.

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About the Author: Jon Hogg

Jon Hogg is the Senior Team Lead, Renewals, at Zensurance.