Difference between Additional Insured and Additional Named Insured

There is an old idiom alluding to a mysterious element hidden in the details, often spelled out as the “The Devil is in the Details.” And this is particularly true for insurance, which is actually a legal contract spelling out what and what not benefits the insurance company will payout in the case of the claim.

Insurance is one of the most regulated industries with legal contracts, and quite frankly, many terms can be quite confusing. And one of those terms that are bandied about which can be quite confusing is the difference betwe4en Additional Insured, and Additional Named Insured.

To help us sort it out, we went to the Wigmore Insurance Agency, a Costa Mesa Insurance company with over 70 years in business and that offers a quality insurance portfolio.

Note that Wigmore Insurance, is regulated in California, and so the rules of the Costa Mesa California Insurance they offer may be slightly different if you are located and buy insurance in North Dakota, Maine, or Michigan. However, generally, each state follows industry-led standards.

Let’s start with one other legal identifier, which is the Named Insurer.

Supposing you own a plumbing business in Costa Mesa and go to Wigmore Insurance for coverage.

On the first page of the insurance documents will be the Named Insurer.

This will definitely be the name of the plumbing company, and in the case of a partnership or LLC, likely the names of the owners.

So supposing the plumbing company mentioned is called “Happy Go Lucky Plumbing Company” and Happy Go lucky has three trusted managers/supervisors who run the plumbing company but do not have any stake in the ownership.

In all likelihood, these three mangers/supervisors would be added to the insurance policy as Additional Named Insured.

They are vital to the company, so these three, (for sake of argument we’ll call them Joe, Bill, and Ginger) would likely be added to the insurance policy as Additional Named Insured.

Since Joe, Bill and Ginger have the keys to the business and are responsible for the day-to-day operations, they would likely be named as Additional Named Insured.

This would allow them the same coverage under the policy as the Named Insured (the owners of Happy Go Lucky Plumbing) with the exception that they would not be responsible for paying the premiums.

Also, in the case of the additional named insured, they would be entitled to notice of any changes in the insurance policy or the cancellation of the policy.

There is fundamentally no difference between the protections of the named insured and the additional named insured except for who pays for the policy and who has the legal right to alter the policy or request a cancellation. Those rights go only to the Named Insurer which in this case would be the owners of Happy Go Lucky Plumbing Company.

So what is an additional insured person under the insurance policy?

Let’s say Happy Go Lucky Plumbing has a major plumbing job that involves one or several sub-contractors.

Happy Go Plumbing, in order to approve those subcontractors for the job, may require each subcontractor to name them as Additional Insured on their insurance policies, allowing Happy Go Plumbing to file claims under the insurance policy if there is a lawsuit.

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

This is done through an amendment in the insurance policy called an endorsement. The endorsement establishes the additional protection covered under the insurance policy.

It should be noted that those who are designated as additional insured, are usually named when as so when the named insurer wants to protect the additional insured from liability. However, the named insurer can not benefit from additional acts outside of the endorsement.

For example, Happy Go Lucky Plumbing may require their Acme, Wiley Coyote subcontractor to identify them in the case of a lawsuit for their job at a Costa Mesa school, and this would be clearly established in the endorsement.

However, if their subcontractor, Acme Wiley Coyote participates in a job with a different plumbing company, Happy Go Lucky would not be entitled to any claims on Acme’s insurance policy other than the original job specified in the endorsement.

As referred to earlier, the Devil is in the details, so if you have specific questions about liability and coverage, be careful to contact your insurance agency.

You may also want to have your attorney review all the insurance forms and suggest modifications to the endorsement for maximum protection.

Wigmore Insurance Agency is committed to your service, has many years of providing insurance coverage, and is an A-rated insurance carrier that maintains the highest levels of financial stability.

Wigmore Insurance Agency will be happy to clear up any questions you might have about endorsements for additional insured individuals you might have.

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