What is an Additional Insured?
Additional Insured status extends the protections and benefits of an insurance policy to parties not originally named as insureds in the underlying policy. Additional Insureds are protected under the policy from any claims or lawsuits that might be filed as a result of the named insured’s negligence.
Additional Insured status is typically required when the Named Insured must provide coverage to other parties for new risks that arise from the Named Insured’s connection to the other party’s business operations.
In practice, landlords and property managers tend to require the tenants and vendors they contract with to name them as additional insureds. This protects them from liability claims while, at the same time, helping minimize their loss history and therefore avoid premium increases on their own insurance policies.
This is usually achieved through an Additional Insured endorsement, which functions as an amendment to the underlying policy.
Named insured vs. Additional Insured: What is the difference?
The Named Insured is the main party insured by a policy. There can be multiple Named Insureds, and these typically appear on the first page of the policy.
Whereas the Named Insured is entitled to full coverage under its policy, Additional Insureds are only covered by the Named Insured’s policy with regards to liability arising as a result of the Named Insured’s negligence.
In practice, landlords and property managers require the vendors they contract with to name them as Additional Insureds. If an accident occurs as a result of the vendor’s negligence while performing work on premises, the landlord / property manager will be protected by the vendor’s insurance.
But, again, the landlord and property manager are only protected in situations where their association with the Named Insured, in this case a vendor, creates liability for them. If an accident occurs on premises, but it is not a result of the Named Insured’s negligence, no rights or benefits would accrue to the landlord or property manager.
What is an Additional Insured endorsement?
An additional insured endorsement is an amendment to an insurance policy that broadens its coverage to persons or organizations not originally named as insureds.
There are two main types of Additional Insured endorsements: Scheduled Endorsements and Blanket Endorsements.
Scheduled Endorsements (a.k.a. Designated Insured endorsements) explicitly list out the name of any persons or organizations that are granted additional insured status in a designated schedule on the endorsement (see below).
On the other hand, Blanket Additional Insured endorsements do not name any specific person or organizations as additional insureds. Instead, they include a general description of the categories or types of persons or organizations that are to be covered by the policy, such as owners, lessees, or contractors (see below)
Another important distinction among additional insured endorsements is whether they cover ongoing operations or completed operations or both.
Additional Insured for Ongoing Operations
Ongoing Operations coverage encompasses liability for any risk associated with a contractor’s ongoing work on premises until that work is either completed or ceases. For example, if a firm doing electrical work on premises accidentally causes damage to a building’s electrical grid, the liability for the property damage caused by this incident would be covered if the firm has coverage for Ongoing Operations.
An Additional Insured Endorsement for Ongoing Operations (i.e. CG 2010 or equivalent) would extend this same coverage to whichever persons or organizations are classified as additional insureds by the endorsement.
In the example above, if the damage to the building’s electrical grid caused property damage to a tenant’s business, the tenant might sue the landlord. The landlord would be covered by the insurance policy of the vendor, however, if the firm doing the electric work listed the landlord as an additional insured for ongoing operations.
Additional Insured for Completed Operations
Completed Operations coverage encompasses all liability arising from a contractor’s finished product or work once operations on premises cease. For example, if a roofing company re-tiles the roof of a commercial retail building and then the roof collapses as a result of their work a week after the job was completed, the liability for any bodily injury or property damage caused by this incident would be covered if the firm has coverage for Completed Operations.
An Additional Insured Endorsement for Completed Operations (i.e. CG 2037 or equivalent) would extend this same coverage to whichever persons or organizations are classified as additional insureds by the endorsement.
In the example above, if someone injured during the roof collapse decided to sue the landlord, but the landlord was listed as an additional insured on an Additional Insured endorsement for Completed Operations on the roofing company’s General Liability policy, the landlord would then be shielded by the insurance policy.
Getting an AI endorsement specifically covering completed operations is important because many common endorsements explicitly exclude additional insured status from applying to completed operations