Additional Insured
Additional Insured status is often required when two companies have a contractual relationship regarding goods or services. A retailer will want third party suppliers, manufactures, or service companies to include an Additional Insured endorsement to their liability insurance regarding risk created in the contract. Building owners and managers will frequently request Additional Insured endorsements from service companies who clean carpets, service HVAC, plumbers and secure document destruction service providers.
Additional insured status is often used in conjunction with a lease agreement between the named insured as the lessee and the owner of a leased building, vehicle or equipment, in which the named insured is required to purchase insurance for the leased property and name the property owner or finance company as an additional insured regarding the leased property. This requirement can apply to office locations or equipment rental.
Additional Insured status for contractors and sub-contractors is frequently used in conjunction with an indemnity agreement between the named insured (the sub-contractor) and the party requesting additional insured status (the general contractor or owner). Having the rights of an insured under its sub-contractor’s commercial general liability (CGL) policy is viewed by most general contractors and owners as a way of supporting the promise of indemnification. If the indemnity agreement proves unenforceable for some reason, the owner may still be able to obtain coverage for its liability by making a claim directly as an additional insured under the sub-contractor’s Commercial General Liability policy.
Additional Insured status is available on an as needed basis – pending underwriting approval. Frequently contractors or commercial property owners will use a BLANKET ADDITIONAL INSURED endorsement where the ADDITIONAL INSURED status is automatic when required by written contract. Oral contracts are not sufficient for blanket additional insured status in multiple states.
Additional Insured status will not provide 30 days notice for cancellation of an insurance policy. The insurance carrier & the insurance agent is required to notify the NAMED INSURED in case of a lapse in coverage. Additional Insured status will not change policy language nor increase coverage beyond the policy limits.