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What is the difference between “named insured" vs. "additional insured”?

What is the difference between “named insured" vs. "additional insured”?

By Wil Chan
Sep 28, 2022
4 min read

When choosing insurance for your small business, you might come across the terms “named insured,” “additional named insured,” and “additional insured.” These terms can be confusing at first — so we’re here to help you understand the differences. 

What’s a named insured?

In insurance, a named insured refers to a person or firm whose name appears at the top or first page of an insurance contract and who receives all the protections of the insurance policy. They’re also called a policyholder or primary insured.

In small business insurance, the named insured is usually the party responsible for purchasing the policy, making decisions about it and paying the premiums for the business.

For example, if you’re a small business owner who purchases restaurant insurance for your business, Tom’s Tacos Inc., then Tom’s Tacos Inc. would be the named insured. 

An insurance contract can have more than one named insured, such as owners or subsidiaries of a business. In the above example, your name could be listed as a named insured after your business’ name. All named insureds may make changes to the policy, but the one listed first — or the “first named insured” — usually holds primary responsibility.

A named insured can make changes to the policy, like adding other people or businesses to their policy. There are generally two ways to add another party: as an “additional named insured” or an “additional insured.” 

What’s an additional named insured?

An additional named insured is someone other than the named insured who shares full coverage under the policy. Additional named insureds are often added after the named insured’s policy has already begun, and may be listed in an addendum to the contract. 

At most insurance companies, including NEXT, a named additional insured is not responsible for paying premiums and cannot modify the policy, though the insurance provider will inform them of changes to it, such as cancellations. 

Some insurance companies give additional named insureds the same rights and responsibilities as named insureds. It’s best to check with your insurance company for details.

For small businesses, additional named insureds often include partners, co-owners, or even family members of the named insureds. In other words, an additional named insured is typically a party close to the policy owner with similar risks and interests.

What’s an additional insured?

Not to be confused with an additional named insured, an additional insured is an individual or firm added to an insurance policy, typically after the policy has already begun. 

Business owners may list additional insureds in an addendum to the contract, called an additional insured endorsement or rider

An additional insured is also covered by the policy, but with limitations. Generally, incidents must be related to a named insured’s work and responsibilities to be covered. 

Let’s say a property owner asks to be added as an additional insured to a general contractor’s liability insurance during a renovation job. If a visitor to the jobsite trips on a power cable and gets hurt, they could sue both the contractor and the property owner. 

The contractor's liability coverage would cover the property owner with additional insured status since the incident was related to the contractor's work. But, if the visitor sued the property owner for something unrelated to the renovation job, they wouldn't be covered by the contractor's policy.

Additional insureds are not responsible for paying premiums and don't have the power to modify the policy.

How NEXT makes protecting your business easy

At NEXT, we make getting the commercial insurance coverage you need to protect your business simple, affordable and fast.

Choose from coverage including general liability insurance, workers' compensation, professional liability, commercial property and tools and equipment coverage. It only takes about 10 minutes to complete an application, see your policy options and purchase coverage.

Then you'll get immediate access to your live certificate of coverage. You can manage your coverage 24/7 with easy DIY access.

Get started with your free online quote today.

What is the difference between “named insured" vs. "additional insured”?

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About the author
Wil Chan is a content writer at NEXT and has been a professional writer for more than ten years. His work has been featured in publications including Forbes and Greatist. He has run a freelance business since 2016 and feels passionate about helping self-employed people in all industries succeed.
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