Additional Insured – Definition
Additional Insured is an Endorsement in Liability Insurance which extends coverage under the Insurance Policy to persons other than the Insured Party.
The entity named as an Additional Insured can avail coverage under the Liability Insurance Policy and can also file a Claim with the Insurance Company under the Policy if they are sued.
How does an Additional Insured Endorsement work?
Additional Insured is normally added to liability insurance policies such as Professional Indemnity Insurance and Commercial General Liability Insurance Policy. The person or the company named as Additional Insured under the Policy can avail coverage provided to Insureds under a Liability Insurance such as:
Defence Cost Coverage for Lawsuits: Additional Insureds can avail coverage for Defence Costs for claims related to Bodily Injury, Property Damage and Advertising Injuries (Libel, Slander, Invasion of Privacy). Additional Insureds can be added to the Insurance Policy by way of an Insurance Endorsement.
For example: Suppose you are a Third-Party Manufacturer of Food Products for a FMCG Brand. The FMCG Brand may require you to add itself as an Additional Insured to your Product Liability Insurance Policy. If the FMCG Company is sued for a Bodily Injury Claim arising out of the food products manufactured by your company, the FMCG Company can raise a claim under the Third-Party Manufacturer’s Product Liability Insurance Policy.
When to add an Additional Insured to the Insurance Policy?
Adding an Additional Insured to the Insurance Policy is usually a contractual requirement. Generally, when multiple parties are working on a common business project and are exposed to the same liabilities, that is when an Additional Insured is required to be added to the Policy.
Some situations where Additional Insureds are required are listed below:
- Contractors and Subcontractors should be added to the CGL Insurance Policy.
- Vendors and Suppliers can be added to the Policy to protect them from liability claims related to their products or services.
- Clients or Customers can be added as Additional Insureds to the Insurance Policy to protect them from unforeseen incidents.
- Manufacturers may cover Sellers or Distributors of their Products as Additional Insureds under their Policy.
The benefit of an Additional Insured Endorsement is that entities added as Additional Insureds under the Policy do not need to purchase their own Insurance Policy – saving them time and money – while still getting the coverage they need.
Even if the entity has its own Liability Policy, it can avail coverage as an Additional Insured under its Contractor’s Policy. This will not trigger Claims under its own policy, there by saving premiums upon renewal.
How to add an Additional Insured to the Insurance Policy?
You can reach out to an expert at Qian Insurance Broking to add an Additional Insured to your Liability Insurance Policy. Our team will assist you with the complete process of the Additional Insured Endorsement. Qian is an experienced Liability Insurance Broker who can assist you with various issues pertaining to Liability Insurance.
The Bottomline
Becoming an Additional Insured gives an extra layer of security. It provides protection from potential financial liabilities and legal disputes. The Additional Insured will receive coverage under another party’s Insurance Policy for any claims or losses from joint activities. An Additional Insured Endorsement is typically used for Commercial General Liability Insurance, Errors & Omissions Insurance and Product Liability Insurance Policy.
If you have any questions about Additional Insured or any other aspects of Liability Insurance, feel free to reach out to us at insurance@qian.co.in or call us on 022-22044989.
We would be glad to assist you!