The named insured will typically be in charge of choosing coverage types and amounts, will receive the premium notice and any notices of cancellation, and will assume responsibility for payment of premiums.
In general, endorsements will provide cover to the people or businesses named on them only for claims arising out of the acts or omissions of the primary insureds. Additional Insureds are therefore not obligated to pay premiums and typically do not receive notices of policy changes or cancellations.
An additional named insured is a person or business that is named somewhere else in the policy. They will however be entitled to notice of policy changes and cancellations and will have the same coverage as the Named Insureds but share the policy limits.
Generally, only the named insured gets the benefits of the whole policy. Other insureds may have coverage under one section but not another:. Rashida is a homeowner whose daughter lives away from home at university. Additional living expenses coverage helps cover extra costs if Rashida must temporarily move out of her home because of a fire, flood, or other insured loss. In some cases, there may be more than one named insured on a policy. For example, a couple may wish to have both their names on their home insurance policy to they can each make changes to it.
Confusingly, insurance policies will specifically name additional insureds, too. You are also be the one to sign the insurance contract.
By the way, there can be more than one named insured on a policy. If that's the case, usually the person listed first holds the primary responsibility. As the signed policy holder, the named insured is generally responsible for purchasing the policy and paying the premiums. However, in some cases it is possible for someone else to purchase a policy for you.
Same goes for paying premiums. This is in fact fairly common for certain types of insurance. For liability insurance, however, this setup is far less likely. In addition, the named insured can add people to the policy as desired. Next up, we need to understand what an additional insured is. Basically, it is any individual or organization that you add to your policy.
This entity then enjoys full coverage from your policy without being responsible for its premiums or upkeep. For example, consider what an additional insured on professional liability means.
Essentially, this is a any entity added as an additional insured on professional liability policy. This entity is then covered from errors and omissions liability in the same way as you are.
Still a bit confused? Let's keep going. While it's true an additional insured is covered, there are limits to the coverage provided. That is the biggest difference between the concepts of named insured vs additional insured.
A named insured is always covered, while an additional insured has certain limitations. If that seems tricky, you can think of it like this. This protects the gym from accidents that may happen during your class. A common example is the owner of real property who leases the property to a tenant.
Typically, the property owner requires that the tenant indemnify the property owner from any liability caused by the tenant. If the tenant or its agents do something that creates liability upon either the property owner or tenant, the property owner will most likely be covered. However, if a third party unrelated to the tenant causes damage, the tenant may be covered but the property owner will not be covered. Thus, if situation arises which creates liability for both the named insured and the additional insured, coverage under the policy is shared between the named insured and additional insured.
Therefore, a situation can easily arise when dual liability results in a shortfall of coverage. By contrast, an additional named insured enjoys all of the benefits that the actual policy owner enjoys.
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