If you’ve ever asked yourself what the difference was between named insured vs. individual insured, we have the answer.
In the insurance world, a lot of the terms sound similar. Add that there are a lot of insurance terms, and it can be easy to get lost on what it all means. When it comes to the named insured and additional insured, it’s no different.
Given that these are important, especially if you find yourself collecting certificates of insurance for your company, we can help you understand what they mean.
Named Insured
The definition named insured is any individual or company, along with any of the company’s owners, that is specifically listed on an insurance policy.
A simplified version is that this would be the individual or company that purchased the policy. For example, if you have a contractor or vendor and you ask for a copy of their insurance, the named insured on the policy would be your contractor or vendor. If you ask for a certificate of insurance, this would be shown as the insured.
Additional Insured
The additional insured is an individual or company that is not normally included as someone who is insured on the insurance policy, but they have been added to that policy by the named insured. In some cases, an additional insured is automatically added, without being named on the policy, if there is a contract asking for additional insured status between the named insured and the additional insured if there is a close working relationship.
For example, your company may ask to be an additional insured on a contractor’s policy who is performing work, services, or products on your behalf. Whether you are automatically or specifically listed on the policy as an additional insured, you now have some rights and protection under your contractor’s policy.
Typically, when your company is listed as an additional insured, you receive proof of this on a certificate of insurance. This can be identified by your organization being listed as the certificate holder and a flag in the additional insured (ADDL INSD) column for the policy. It can also be written in the Description of Operations Box.
Additional Insured
If your company has a contractor who performs work for you, it is normal to ask to be additionally insured on their policy. This is because accidents and faulty work can happen, which may result in damage to property or someone, such as a customer, getting hurt. If you are the one coordinating the work between the customer and your contractor, your company can get caught in the middle and possibly face the bill. If you are an additional insured on your contractor’s policy, then you can reach out to their insurance company to file a claim to cover expenses for the accident.
If you collect certificates of insurance, it is important to know the difference between the named insured and the additional insured. The named insured is the individual or company who purchased the policy, which should be your contractor, and the additional insured is typically your company, which provides you with additional privileges to your contractor’s insurance.
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