Additional Insured EndorsementAdditional Insured Endorsement

Not every person who lives in or has an interest in your home fits nicely into a standard homeowner policy. As a result, you face the risk of gaps in coverage and paying high out-of-pocket costs for others' liability expenses. An additional insured endorsement can prevent these things from happening.

What is an Additional Insured?
A standard home insurance policy typically covers the policyholder, spouses, and any dependents living in the home. An additional insured is any third party who is not already covered by your policy but has a certain relationship to your property.

The additional insured might get listed by name on your policy, such as "Mary Jones." Other times, they might get listed through a general description, such as "staff" or "guests."

What is an Additional Insured Endorsement?
An additional insured endorsement amends your insurance coverage. It allows you to extend general liability insurance under your property insurance to those not already protected by your policy.

What is the Purpose of an Additional Insured Endorsement?
The purpose of this endorsement is to extend liability protection to parties who might get sued for acts carried out on your property or during tasks performed for you.

For instance, if your roommate's dog bites someone, additional insured coverage should cover any damage, injuries, and legal defense costs. This kind of situation is not only beneficial for your roommate. You might also get named in the lawsuit. In that case, it protects you, as well.

Who Should Be Listed as Additional Insured?
These are examples of groups of people typically listed as an additional insured party:

  • Anyone that has a liability interest in the insured property
  • People who live in your home -- not related by blood, marriage, or adoption, such as girlfriends, boyfriends, or nannies.
  • Anyone not living with you yet has an ownership interest in the insured property, like a former spouse who still owns part of the home. 

Can an Additional Insured File a Claim?
Yes, a party listed as an additional insured can file a claim if they get sued in a personal liability lawsuit. The result of that claim depends specifically on the coverage outlined in the policy and the insurance investigation findings.

Additional Insured Homeowners Insurance Examples
There are many different reasons to add someone as an additional insured person. The following are just a few examples to help you gain a better understanding.

  • You and your sister co-own the home your grandmother left to you both, but only you live in it. She has an insurable interest, so you should list her as an additional insured.
  • You and your wife are divorcing, so you moved out of the home you both still own. You can stay listed as an additional insured until you either sell the house or the courts determine who retains ownership.
  • You live with two roommates. You can protect all of you from any incidents they might cause by making them additional insureds.
  • Your girlfriend lives with you. Since you are not married, your coverage does not automatically apply to her. You can add her as an additional insured, instead.

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Types of Additional Insured Endorsements
You can choose from several types of additional insured endorsements, depending on your needs.

Blanket Additional Insured Coverage
A blanket additional insured endorsement provides extended coverage to any party entitled to liability coverage under your home insurance policy. This coverage is automatic, meaning you do not have to name each additional insured party separately.

Blanket endorsements protect the homeowner from vicarious liability incidents caused by someone for whom you are responsible.

For example, it would cover a babysitter, housekeeper, or teenager's friend while they are on your property without you needing to add them to your policy.

Named Insured vs. Additional Insured
The named insured is the insurance policy owner, and anyone covered under the policy. The insured includes your children, spouse, parent, grandparent, and any other immediate family members related by blood, marriage, or adoption that live with you. Named insureds have full coverage on your policy.

Additional insureds, on the other hand, have only liability protection. They also have no authority to make changes to the policy. Anyone not automatically covered under your home insurance policy can have additional insured status.

An example would be a former spouse who still has some level of ownership in the property.

Loss Payee vs. Additional Insured
A loss payee is a lender of a loan for real estate or personal property that receives an insurance payout before anything goes to the named insured. Loss payee coverage only applies to property damage, whereas an additional insured has liability coverage.

A mortgage lender commonly gets listed as a loss payee. If damage occurs to the home, the insurance company first sends payment to the lender. Sometimes, the lender uses it to pay off the mortgage. Other times, they give the payout to the homeowner for repairs.

Additional Insured Mortgagee
An additional insured mortgagee is very similar to a loss payee. However, where a loss payee is a party who loaned money for real estate or personal property, a mortgagee only lends cash for real estate. They get notified if a policy gets canceled or if there are any changes to the policy.

Another difference is that an additional insured mortgagee receives the insurance payment even if the homeowner intentionally causes the property damage. For instance, if the homeowner sets the house on fire on purpose, the mortgagee still has the right to the insurance payment. A loss payee is not entitled to compensation if the homeowner caused the damage.

Additional Interest vs. Additional Insured
Additional interest is often confused with the term additional insured. In simple terms, an additional interest party interested in whether there is a policy or if it changes, but they do not need coverage.

An additional interest party has no authority over the policy. Anyone listed as an additional interest cannot make changes or file claims. They only receive notices of cancellation or changes. These are typically people who have a financial interest in the property, such as mortgage lenders or landlords that require proof of insurance.

An additional insured person, on the other hand, needs coverage under your policy.

Adding Trust as Additional Insured
You may choose to put your home in a trust as a risk management strategy during estate planning. If so, the next assumed step for homeowners is often obtaining additional insured status for the trust, but is it the right step to take?

Under most circumstances, adding a revocable trust as an additional insured will not work. Once you transfer ownership of your home into your trust, the trust becomes the named insured -- not you. You become the additional insured, so you only have liability coverage.

Even if the insurance company still considers you as the homeowner, the trust does not have enough coverage for all potential risks. Either way, there are gaps in coverage.

Instead, it is best to add the trust to your policy and just have multiple named insureds if your insurer allows it. This way, the policy's full coverage applies to all -- you, your family, and your trust. Speak with your insurance agent if you feel uncertain about how you should list the trust.

Landlord Wants to be an Additional Insured
If your landlord is requesting additional insured status, you might be wondering why they need coverage under your policy. The answer is that they do not. Landlords have their insurance policies that provide liability protection that additional insured coverage would provide. They do not need double coverage.

They do, however, have an insurable interest in the property. As the property owner, they want to ensure that it is protected, so many require that you provide a certificate of insurance.

When they say they want to get listed as an additional insured, he or she most likely means they want you to list them as an additional interest. This is the best strategy for you. This status means that he or she gets notified if you let your coverage lapse or make changes.

Be careful if you do add your landlord as an additional insured. Any claim your landlord makes becomes a claim on your claims history, not the landlord's claim's history.

How to Add an Additional Insured
Some insurers let you add an additional insured person on their website. Others require that you do it over the phone or face-to-face to fill out a form and discuss the addition. In doing so, they can determine the level of risk the additional insured might add to provide an accurate quote.

Why Request Additional Insured Status?
Any time you have work done on your home, you should get added as an additional insured to the worker's liability. Doing so means if the contractor's ladder fell on top of the mailman, and the mailman sued you, the contractor's liability would cover the costs of any bodily injuries. He should also have a blanket additional insured endorsement to cover any property damage or bodily injury caused by his subcontractors.

For example, if you hire a general contractor to remodel your home, you should ask to be listed on his or her policy.

You can ask for a certificate of liability insurance from the general contractor for proof of insurance coverage. Most legitimate contractors are very willing to show it to you.

Additional Insured Endorsement Homeowners Insurance Form
The endorsement form used to add an additional insured person is a straightforward one. Click here for an example additional insured endorsement form.

Hope that helps!

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Young Alfred