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Named Insured vs. Additional Insured


Depending on your type of business, you may be requested to provide proof of insurance to your suppliers.  In some cases, they are requesting that they be added as a Named Insured to your policy.  The problem with this is they are unknowingly asking for full liability insurance for their own operations and activities to be covered under your policy.  Some companies even know that this is the case, and are still requesting it.  These are unreasonable requests.

The Named Insured is the “Primary” party to the insurance policy.  This policy will take into account the operations or activities of the Named Insured on the policy.  In return the Named Insured is entitled to expect full coverage from the contract, of course the insurance company then charges the Insured an appropriate premium for the transfer of this risk to them.

Additional insured’s however, are not considered to be “Primary” parties to the contract. They may be added with respect to losses that they may be drawn into because of the operations or activities of the Named Insured that they are associated with (not because of the operations or activities of their own company).  What this means is that the operations or activities of the Additional Insured are not covered under this policy.  This is the single biggest difference.  They need to have their own policy being Named Insured in order to have coverage for their own operations and activities and pay an appropriate premium on their own policy.

The adding or deleting of Additional Insureds is controlled by the Named Insured and/or the Insurance Company.  Both have to agree to either form of addition to the policy.

Most Additional Insured’s can be added to Liability policies at no additional premium by using a text similar to; “are added as an additional insured solely with respect to the activities of the named insured.”

Be sure to seek advice and purchase insurance from an insurance broker who understands your business!