“Additional insured” refers to extending insurance coverage to someone other than the policy owner, such as legally licensed drivers or property owners. Commercial liability insurance policies often have additional insured riders, but coverage varies and policy terms should be carefully read.
The term “additional insured” refers to the coverage provided by an insurance policy when circumstances require that someone other than the policy owner enjoy the benefits of the coverage. The policy owner is the named insured, and the policy will specifically specify the circumstances under which persons other than the policy owner will be covered.
For example, in many countries, it is a legal requirement that cars be insured. The owner of a car will take care of the insurance coverage, and the policy will typically cover legally licensed drivers who are allowed by the owner to operate the car. Without that provision, it would be very difficult for a company to provide a vehicle for an employee, because the employee would have to obtain separate insurance coverage for the time spent driving the employer’s vehicle. Furthermore, it would be almost impossible for private car owners to allow anyone else to drive their cars. A related issue is the requirement that any lien holder be named as an additional insured in the event of loss.
Riders are also commonly found in property and casualty insurance. For example, someone who rents a property will often need to obtain accident insurance and name the owner as an additional insured. Therefore, if a person is injured on the property, sues the tenant for negligence, and adds the landlord to the lawsuit, the renter’s insurance will cover the landlord’s liability. Similarly, homeowners who have taken out a mortgage to purchase the property are generally required to obtain homeowners insurance and name the lender as an additional insured.
Commercial liability insurance (CGL) policies almost always have additional insured riders. For example, a CGL policy can name as additional insured all officers, employees and agents of a company, covering them for any act they perform in the normal course of performing their duties. However, said coverage does not extend to acts outside of the employment or commercial relationship. For example, a company’s CGL policy might name all salespeople as additional insureds, thus covering sales agents for liability incurred in the course of selling the company’s product. However, sales agents who incur liability as a result of other actions unrelated to the sale of the company’s products cannot be covered under the CGL policy.
This type of coverage is not the same in all cases & emdash; Many policies very clearly explain the limits of such coverage. Therefore, the best guide is always to read the specific policy terms carefully when determining the scope of coverage for additional insureds and whether additional coverage is necessary.
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