General Liability Insurance: What Does “Additional Insured” Mean?

As a business owner, it’s likely you’ve been asked at some point or another to add a client, landlord, or similar entity onto your general liability insurance policy as an “additional insured.” You might ask, why do I need to put them on my business insurance policy?? What about their insurance policy? Well, here’s a little background on what it means and why it is requested so often in doing business.

Adding another entity as an additional insured on your general liability insurance policy serves to protect that additional party in the event of negligence on your part as the primary policyholder, or “named insured.” It is not the intent of your policy to pick up the liability of another party when you had nothing to do with a claim or occurrence.

Here are some loss examples to give you a better understanding:

• You are a sub-contractor and have added a general contractor on your policy as an additional insured by request. An individual walking the grounds of your job site sustains a serious injury from a fall caused by a pothole in a parking lot. The parking lot is being built by you. This individual brings a suit against the general contractor who is covered as an additional insured on your policy.

• You are a tenant of a commercial building and have added the landlord of your building as an additional insured per the terms of your lease. A customer visits your premises and slips on a wet spot on the vinyl floor. The customer cracks their head open and brings a suit against the landlord who is covered under your policy.

Typically, a larger and more powerful business will require that smaller entities (desiring to do business) have the larger business named as an additional insured. This reduces the loss exposure of the additional insured and keep its premiums manageable.


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About Jimmy Kinmartin - Business Insurance & Risk Management

Jimmy is a California licensed Property & Casualty AND Accident & Health insurance agent working at the Olson Duncan Insurance brokerage based in Torrance and Irvine, CA. He grew up in Fullerton, CA and graduated from Servite High School in Anaheim and Loyola Marymount University in Los Angeles and currently lives in Tustin, CA. Have questions? Just ask! Or, follow Jim on Twitter at @JimKinmartin

5 responses to “General Liability Insurance: What Does “Additional Insured” Mean?”

  1. Carroll B. Merriman says :

    Now I dont mean to be a mean bad guy here but Isnt US insurance going downlhill? What do you think? Now I mean first it was bailing those greedy insurance companies and now lack of total responsibility towards an ethical insurance towards the poor. Where is Uncle Sam Heading?

  2. Roy Slater says :

    Thanks for the tips on general liability insurance. It seems like there is always something new to learn about insurance and what we need to do to protect ourselves. I had never heard of being additional insured so this is a nice explanation of why I should consider it. Great work.

  3. Charlie Brown says :

    Doesn’t my insurance already cover my negligence in these situations? How does the specific naming make a difference?

  4. Karyn Smith says :

    Old post but this still comes up all the time and wondering if you can respond. Our insurance company actually said adding someone (company) to your policy as an additional insured is making a mistake. Their mistake. It is in effect making them a party to your policy and they would be suing themselves if something happened. We have a small business and larger clients ask us all the time to add them as additional insured. It would be interesting to hear if anyone was actually forced to cover a company’s losses that were listed as “additional insured.” Have you had that experience? Our insurer is a very large company. If they were going to take you to court over the loss, how does the language impact anything?

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