What is an Additional Insured?

Today we’re going to discuss what an additional insured endorsement is and what you should look out for. If you’re a contractor it’s very common for a building owner or project manager to request a certificate of insurance from you before they let you on a job site. Also if you’re a business owner with a lease it’s very common for the building owner to request a certificate of insurance from you when you first move in and every year thereafter. 

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When Should You Add an Additional Insured?

The most common reason to add an additional insured to your policy is that someone like a building owner/landlord or general contractor requires you to add their company as an additional insured on your policy in connection with their projects or leased space.

  • An additional insured endorsement in a general liability policy extends the coverage beyond your policy to include other individuals or groups that were not named in your original policy.

There are many types of additional insured endorsements available in the insurance market today and for the sake of not boring you to death, we will keep this as simple as possible. It’s very important that you consult with a licensed insurance broker in your state for further information regarding additional insured endorsements.

What Does it Cost to Add an Additional Insured?

So generally speaking you have two options. One, you can purchase a blanket additional endorsement which is an insurance policy add-on that automatically provides coverage to any party to which the named insured is contractually required to provide coverage.

  • The cost to add blanket additional insured coverage will vary widely between carriers. We’ve seen companies charge as little as $100.00 to as high as $750.00 a year or more depending on the type of business.

For a contractor that does commercial work, it is usually a no-brainer to obtain this endorsement since it’s the most cost-effective for the employer. Your second option would be to schedule each specific entity as an additional insured on your policy.

If you think you will only have one or two additional insured requests throughout the entire year then this may be your best option. For example, a residential contractor may not want to purchase the blanket endorsement because a majority of homeowners don’t request to be added as an additional insured on your general liability policy.

  • The cost to add one additional insured to your policy will again vary widely between carriers. We’ve seen companies charge as little as $40.00 per AI to as high as $110.00 a year per AI again depending on the type of business.

Not All Additional Insured Endorsements Are Created Equal

According to an article posted by Big I New York which was co-authored by a local law firm stated that:

  • “A common misconception is that purchasing a blanket additional insured endorsement is always better because it will cover anyone the insured may need to include. However, that is not necessarily true. The test of whether an additional insured endorsement is better than a scheduled endorsement will depend upon the nature of the contracts the insured enters into and the interests the insured needs to protect. For example, if you’re a small contractor who never enters into formal contracts, but verbally agrees to purchase additional insured coverage, a blanket additional insured endorsement may not provide any coverage at all, since a typical blanket additional insured endorsement will require that the agreement be in writing”.

So as you can see this can get very in-depth and as a business owner knowing what an additional insured endorsement is is just the beginning. If you are interested in learning more about this or if you’re interested in purchasing a new general liability insurance policy, then I would encourage you to reach out to us today via the form below.

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Are you ready to save time, aggravation, and money? The team at LAF Advisers is here and ready to make the process as painless as possible. We look forward to meeting you!

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