Looking at Additional Insured Status
Written by Marlo .
Not a very exciting title for a post.
There are two times when a business cheifly interacts with its insurance company:
- At the start of the policy and during the application process when the business is purchasing the policy; and,
- When the company, through its operations, must add another entity to its policy as an additional insured.
The status of “additional insured,” while demanded in a rote fashion in commercial contracts around the world, is not widely understood by most business owners. In the typical scenario the business has secured a lucrative contract with a larger company. The larger company sends over a contract the smaller company must agree with in order to do business with larger company. In the contract, larger company demands additional insured status. Smaller company calls its insurance professional and the agent or broker takes down some information and sends a facsimile later with an insurance certificate for smaller company to present to larger.
The issue of what rights this extends to larger company, or what coverage is diminished to smaller company, and what practical effect this agreement has, is seldom considered.
Look at your contracts, consider the “additional insured” demand, consider your chief sub-contractors – what do their business insurance policies actually state? Look at the contracts your company signs with larger companies – does your company know what it is offering when it agrees to add an “additional insured?”