An additional insured is defined as a person, group, or location that is added to a business insurance policy that you have purchased. Essentially, it’s a way of extending the named insured’s coverage to others.
While typically used in commercial general liability (CGL) policies, an additional insured can be added to tenant insurance, professional liability, errors & omissions, and more.
Additional insured works similarly to when you get into a car accident, and the other person is at fault. In that case, you file a claim with their insurer. Then they have to pay any deductibles, and their insurance company has to pay to repair your car. The accident and claim filed go onto their record, not yours.
Listing a person or organization as an additional insured does not change what’s covered (the policy’s scope of coverage). It simply means that the additional insured party has protection for liabilities you may bring to their business.
You may wonder, “Why would I want to add an additional insured?” It may seem unusual, but it’s a common business practice.
Generally, if a smaller business wants to work with a larger business, the larger business will require that the smaller add them or their people as additional insured.
It boils down to larger businesses having less financial risk if something unanticipated happens. It may seem unfair, but it’s a way for them to protect their own business in exchange for hiring the small business.
For example, a general contractor might hire a plumber subcontractor for a job and require them to add the general contractor to their professional liability insurance. If down the road there are problems with the plumbing and the general contractor gets sued by the building owner, the general contractor can then use the plumber’s policy, instead of their own, to defend themselves.
Likewise, if you’re a personal trainer who sometimes holds sessions at a gym, the gym may require you to add their location as an additional insured. That way, if there’s an accident, the gym is protected by your policy.
You can add these people, groups, or places to your policy through an amendment called an endorsement. Also known as a rider, policy endorsements are tweaks or additions to your current policy that you and the insurance company agree to.
By adding an additional insured endorsement, you don’t have to get a whole new policy for everyone you want to extend your insurance to. This endorsement basically adds the additional insured to your proof of insurance document.
While almost every insurance policy offers the option to add an additional insured, some insurance companies make it harder to get. Policyholders might need to contact an insurance agent or pay a fee to make the update.
With NEXT, you have 24/7 access to add additional insured and get your free, updated certificate of insurance any time you need.
Different industries have various reasons for wanting to be included as additional insured. Some of the most common are:
Janitorial and floor waxing businesses can create slippery situations where someone might take a spill. A building or business that hires cleaners may require being added as an additional insured on the cleaner’s general liability insurance.
In addition to professional liability, developers, building managers, and other clients want to ensure they’re protected in case of common construction claims such as bodily injury or property damage. Due to all the risks involved, this is why construction contracts commonly require adding additional insureds to general liability coverage.
Hair stylists are often self-employed and rent a booth or chair at a salon to operate their business. While their work may not seem overtly risky, they can still be held liable for damaging a person’s hair or someone tripping over power cords. Salon owners may require stylists to have their own general liability insurance policy and have their booth renters add them as additional insured.
The accounting profession doesn’t have the same kind of obvious bodily or property damage liabilities as other examples, but their risk is in the services they provide. A series of typos or miscalculations can cost a client a lot of money in fines, fees and taxes.
That’s why clients may ask to be included as an additional insured on an errors & omissions policy. This insurance can help cover legal costs (up to policy limits) in case they have to defend themselves for an error their accountant made.
As a small business owner, we know you’re busy and need to get back to your business. That’s why we provide the tools to update and access your certificate of insurance with additional insureds 24/7.
Share as many certificates and add as many additional insureds as you need, whenever you need to.
You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.
Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.