What “Additional Insured” Means for Small Businesses

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Do you need this risk management tool for your business?

Have you heard of “Additional Insured” coverage? As a business owner, you may have, you may even have had a colleague or company that you subcontract with ask you to include this coverage in your existing policy. Whether you’d had experience with this type of coverage or not, it’s important to know what it is and what it covers to ensure that you’re managing any and all risks to your business. Read on to learn more about “additional insured”, how it’s used and whether or not you need to add it to your business coverage.

What does “additional insured” mean?

By definition, the term “additional insured” means that a person or organization enjoys the benefits of being covered under an insurance policy purchased by another person or company. This type of coverage can be limited to a certain project or timeframe, or continue for the lifetime of the policy. The amount of coverage provided for the “additional insured” may often times be less than the protection given to the policyholder. The details of coverage are laid out within the terms of the policy.

What does it cover?

The person or group that is considered the “additional insured” has a limited amount of coverage that is specified by the policy. Here are some of the circumstances that this policy would provide protection for:

 

  • • Lawsuit: If an “additional insured” has a lawsuit brought against them, the policy would provide funding for the legal defense including attorney fees, court costs and judgment costs.
  • • Injuries: In the event that an “additional insured” suffers an injury on the job or personal damages as a result of libel allegations, the policy would provide compensation. This can also include property damages.

Do I need “additional insured” coverage?

Before you make the decision to add this type of coverage to your existing business policy, keep in mind that it should not be viewed as an added expense, but as added protection. The next thing to consider is your industry and how often you have to partner with other businesses to serve your customers. Here are some examples of those that may need “additional insured” coverage:

  • Subcontractors
  • Suppliers or delivery services
  • Commercial property landlords
  • Lessors of leased equipment
  • Retailers and distributors
  • Roofing, plumbing, carpentry and electrical contractors
  • Janitorial, landscaping, maintenance workers

How to get “additional insured” coverage

Perhaps you have not come across an instance where a company that you’re working with requires this type of coverage, but it could happen down the road. If you feel that you may need “additional insured” added to your policy, it’s best to get in touch with your provider right away to discuss your options. It is usually not difficult to amend your current business policy to include “additional insured.”
Businesses today often work together and as a result, understanding and managing your risks is crucial to ensuring your company and all its assets are protected. We know how important your business is to you and can guide you to the ideal policies that will provide the coverage you need. Contact us today to discuss your business policy.