There’s a lot to learn when you run your own business, especially when it comes to insurance. You may be asked to add someone to your business insurance as an additional insured, particularly if you work with clients or partners. If you’re new to business, this might sound like an odd request.
Adding an additional insured on Professional Liability, General Liability, and other policies is a common event in the business world. It’s typically a straightforward process that can benefit both parties. Let’s take a closer look at additional insured and why you may need to add them to your business insurance policies.
Policyholders, Additional Insureds and Certificate Holders
To understand what an additional insured is, it often helps to also know other insurance terms that are closely related:
Who is the policyholder?
A policyholder is the person or business that owns an insurance policy. They are the person who purchased the policy and who benefit directly from it. You are the policyholder of any insurance policies that you have purchased to protect yourself or your business.
Who is an additional insured?
An additional insured is someone you add to your insurance policy. This can be an individual or a company. Additional insureds are named on your Certificate of Insurance (COI) after you have added them.
Who is a certificate holder?
A certificate holder is a person who you have given a certificate of insurance. Certificate holders request a COI as proof that you have business insurance and that your policies are currently active. An additional insured may ask for a COI as assurance that you have, in fact, added them to your business insurance policies.
Why would I add an additional insured to my policy?
Now that you understand what an additional insured is, you might be wondering why you’d need or want to add someone else to your business insurance policies.
Typically, an individual or business will ask to be added to your policy to provide them with extra liability protection. If they are sued due to your actions, the additional insured can go to your insurance policy to protect their business, rather than relying on their policy alone.
An additional insured may only be protected by your policy for a limited amount of time. For example, just until the project you are working on together ends. However, they can remain on your policy for as long as it is in force. This is more common if you are working with long-term partners or clients. Adding someone as an additional insured to your policy is often a contract requirement to work with certain businesses.
This process can also work the other way around. You can ask to be included as an additional insured on another individual or business’ policies to increase your liability protection.
Can I add an additional insured on a Professional policy?
Maybe. Adding an additional insured to your Professional Liability policy depends on whether your insurer allows it or not. Many do, but some may not. Your insurer may need to approve the additional insured on your Professional Liability policy before officially adding them.
This information should be included in the policy wording you received when you purchased your insurance. You can also speak with your insurer if you are unsure.
How can I add an additional insured to my policy?
Adding an additional insured on your Professional Liability or other insurance policies is often a simple process. Many insurers allow you to make these updates online as they are needed, adding as many businesses and individuals to your policies as you wish. You can even receive an updated COI immediately, so you can quickly provide this information to your additional insured or other certificate holders.
When comparing insurance policies, you might want to ask how long it takes for the insurer to provide you with a COI. For some insurers this is still a manual process that can take days or even weeks to complete. Depending on how you do business, this may be too long to wait. Being able to receive an updated COI immediately could be an important factor to consider when you choose a policy.
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