If the hiring company was added as an additional insured, it would be able to handle the claim through the other company’s insurance policy, which will provide funds for legal defense and settlements. If the company that is hired causes an accident or lawsuit, the hiring company could be sued. When a business hires another company, it’s common for the hiring company to request that the other company add it as an additional insured to help reduce liability risks. How does coverage work for additional insureds? In that situation, your insurance would handle the general contractor’s legal expenses. If one of your employees accidentally injures a third party or causes property damage, both you and the general contractor could be sued. You’re required to add the general contractor as an additional insured.
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A general contractor has hired your roofing company to install new roof tiles on a house. The cost to add an additional insured is usually fairly low. You can add an additional insured to your policy by endorsement. Companies that hire contractors and contractors that hire subcontractors also commonly request this coverage to protect them from any issues caused by the contractor or subcontractor. Often, landlords will require that tenants add them as additional insureds. It’s common for companies to add additional insureds on general liability and commercial auto policies. When should I request additional insured status? If a student slips and falls at your yoga studio, sustains an injury, and names both you and your landlord in a lawsuit, your landlord could file a claim under your general liability policy, which would cover their legal fees and any resulting settlements. The landlord may require you to add them as an additional insured under your general liability policy. You rent a studio where you teach yoga and fitness classes. It extends some of the policyholder’s coverage to another company or person that could be held liable for the policyholder’s activities. Additional insured status is a way to protect yourself in these circumstances. Entering into business relationships with other companies can bring additional risk exposures.įor example, if you hire a contractor who then causes someone else an injury or damages property, both you and the contractor could be sued. What is an additional insured?Īn additional insured is a business or individual that is able to receive some coverage under another company’s liability insurance policy. In contrast, a loss payee has a financial interest in a property and can receive benefits from another company’s property insurance policy if the property is damaged or destroyed. Although both terms refer to entities that are entitled to coverage under another company’s insurance policy, the difference between the two lies in which insurance policy will respond to a loss.Īn additional insured can receive coverage under another company’s liability insurance policy in the event of a lawsuit. 
Is a loss payee the same as an additional insured?Ī loss payee is not the same as an additional insured.
Can you be both a loss payee and an additional insured?. 
How does coverage work for loss payees?.How does coverage work for additional insureds?.When should I request additional insured status?.What is the best small business insurance?Īdditional insured and loss payee are similar concepts-they both allow another business or individual to benefit from a policyholder’s insurance-but they refer to two distinct concepts and it’s important to understand the difference between them.
What is a certificate of insurance (COI)?.How much is general liability insurance?.How much does small business insurance cost?.CoverWallet Commercial Insurance Review.Best Workers Compensation Insurance Companies.Best Legal Malpractice Insurance Companies.Business Insurance Business Insurance Business Insurance.
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