Differences Between Named Insured and Additional Insured: Part 1

This post is part of a series sponsored by TSIB.

Often, the terms named insured and additional insured get lumped together to be interchangeable. However, that is not the case. Keep reading to learn about each one!

1. First Named Insured

A “first” named insured or named insured is the party that is the policy owner. This status entitles the policy owner to all of the benefits and coverages the policy provides. This entity/individual pays premiums, reports claims, pays deductibles/retentions, and cancels coverage.

2. Additional Named Insured

Additional named insureds are entities who have been added to the named insured’s policy. Often, the operations of both parties are closely tied together. One example is that a parent company could have their subsidiary company listed on the corporate insurance policy as an additional named insured.

The first named insured is being insured for their own business operations. Coverage is not contingent upon the damages incurred by an additional named insured. Companies should include additional named insureds only when there is a close tie between the organizations, such as in a parent-subsidiary relationship or contractually obligated.

3. Additional Insured

Additional insureds are additional entities listed on a named insured’s policy. An additional insured is provided coverage under the named insured’s policy by virtue of an additional insured endorsement. In order to add an additional insured, the additional entity must contractually agree to indemnify the named insured. By naming the indemnitee as an additional insured, this reinforces the risk transfer accomplished in the contractual agreements that provides the additional insured with direct rights under the named insured’s policy.

The named insured extends protection to the additional insured under the terms and conditions of the named insured’s policy. However, coverage will be provided for damages incurred by the additional insured only if there is a connection between the damages incurred and the operations of the named insured. In addition, this coverage is not applied to the additional insureds own business operations.

Coverage is only provided to additional insureds when the damages incurred are connected to the operations performed by or on behalf of the first named insured. By requiring an additional insured status on the first named insured’s policy, this typically provides the necessary coverage without exposing the original policy to unrelated operations.

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