The insured is the person, company, or group whose life or property is protected by an insurance policy. After an insurance claim is filed, an insured will receive financial support or other benefits. When an insured suffers a covered loss, damage, or injury, the insurer pays according to the policy's terms.
Most general liability insurance policies have several insureds, including employees, volunteers, and executives. However, these policies will typically stipulate that the insurance will only provide protection while the insureds are fulfilling duties on behalf of the named insureds or on the named insured’s property.
One policy usually covers multiple insureds. In some cases, the insurance policy extends to other individuals beyond the name listed on the declaration page. Insureds are divided into two categories: named and additional.
Named insureds refer to the insureds listed on the insurance policy’s declaration page and are considered the actual owners of the insurance policy. The named insured is usually the one to sign off on the insurance policy’s contract and therefore is deemed responsible to pay for premiums. Named insureds are entitled to 100% of the policy's benefits and coverage.
An additional insured is any individual or organization that is added to the policy in addition to the named insureds. These entities are usually included as an endorsement to the policy. Although the additional insured does not pay the policy premium, he or she still enjoys the policy's coverage. Be that as it may, the additional insured coverage is typically limited. Their coverage will only extend to liabilities or damages related to the named insureds.
To better understand the difference between named insureds and additional insureds, let’s take a look at an example referring to a liability policy. Assume you are a yoga teacher who is interested in teaching a class at a local community center. It may be a good idea to add the community center to your insurance policy as an additional insured, in order to protect the center in the event of an accident occurring during your yoga class. By doing so, the coverage for the community center extends to your yoga classes only. The insurance policy will not affect any other activities at the community center.
Understanding the difference between named insured and additional insured will allow you to determine what is best for your business. Additional insureds do enjoy a certain amount of coverage, but it is important to recognize its limitations. If you need further clarification on your rights and requirements as an insured, contact an experienced insurance lawyer. Insurance lawyers will also be able to provide guidance if you are interested in adding insureds to your existing policy.