What is an additional insured?

What is an additional insured?

We are often asked what an additional insured is and why it is required on some law firm insurance policies. Hopefully, the following definition will provide some insight:

A person or organization is not automatically included as an insured under an insurance policy that is incorporated or added as an insured under the policy at the request of the named insured.

A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., wanting to preserve firm volunteers performing services for the company or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of the property leased by the named insured).

In liability insurance, additional insured status is commonly used in conjunction with an indemnity agreement between the insured (the Indemnitor) and the party requesting the status (the indemnitee). Having the rights of an insured under its indemnitor’s commercial general liability (CGL) policy is viewed by most indemnitees to back up the promise of indemnification.

If the indemnity agreement proves unenforceable, the indemnitee may still be able to obtain coverage for its liability by making a claim directly as an additional insured under the indemnitor’s CGL policy.

In property insurance, this status is most often used in conjunction with a premises lease agreement between the named insured as the lessee and the owner of the leased building, in which the insured tenant is required to purchase insurance on the leased building and name the building owner as an additional insured on the insurance policy concerning the leased building.