Contracting work comes with risks. While your contracting work may often only involve you, your client and a bag full of tools, there are times when you may need to subcontract your work. If you have various forms of liability insurance, you’ll be covered if you accidentally damage a client’s property or, worse comes to worst, your actions accidentally result in someone else’s injury. What about your subcontractor? This is an example of when your additional insured options will come in handy.
Additional insured status is an endorsement placed on a pre-existing liability insurance policy, such as a General or Professional Liability Policy. It extends the reach of the endorsed policy to others who do not have the policy, but who may benefit from coverage. If you decide to do work with a subcontractor or another company, it may be in your best interest to have that company add you as an additional insured on their existing insurance policy.
If a subcontractor or company you’ve chosen to work with is at fault, it could be costly for you. Alternatively, that company may request that you add them as an additional insured on any policy that you own. This will help cover them in the case that your company is found at fault. When you are added to their policy, your business is free from liability, while enjoying the benefit of the Subcontractor’s Liability Insurance. If your business is at fault, your partner company or contractor is released from liability when they are added as additional insured to your policy. When working with another company, it may be of mutual interest to have each other added as additional insureds.
Although this type of endorsement is fairly common among general contractors, it can extend to other industries or individuals. For example, a Commercial Auto Insurance policy may have an “additional insured” endorsement. This is a relatively common scenario businesses with company vehicles that are driven by multiple employees. The additional insured endorsement on a Commercial Auto Insurance policy will cover anyone else who may drive company vehicles without giving a specific name. It is possible to have this type of additional insured status on other types of insurance policies as well. However, some additional insured endorsements may require specific names.
It’s important to note that additional insured status does not always mean equal benefits. Several types of additional insured statuses offer different levels of coverage. When it comes to an additional insured status under a Personal Auto Insurance Policy, for example, this “blanket” insurance typically treats any driver as the same. However, many additional insured endorsements under various liability policies may only take effect during the time those added are working with or for you. Others may limit the amount of coverage they receive.
Most additional insured endorsements cover the very basics of liability coverage protection: legal defense and various forms of personal injury or property damage compensation. Adding this endorsement is not free. While it may increase the cost of premiums, it costs less than a new policy.
Getting an additional insured endorsement added to your policy is simple. First, you’ll need to know who you want to add to under the endorsement. This can be a specific individual or an organization. You’ll also likely need the addresses of all those added under the endorsement. It is unlikely that you will need to provide any personally identifying information beyond that. The additional insured status should not allow the insurance company the right to information such as Social Security Numbers or credit card information from the additional insureds under your policy.
An additional insured endorsement typically appears as a separate document under your policy. If someone else intends to add you as an additional insured, or you, have requested that they do so, ensure that you request a copy of this document. Unlike with a Certificate of Insurance, you can’t request proof of additional insured endorsements from someone else’s insurance company. However, some insurance companies may provide you with an additional insured document in addition to a Certificate of Insurance.
Additional Insured Endorsements can often be a great way to build a relationship with a client or a business partner. Adding an additional insured can come in handy for business relationships, especially if both you and your business partner add these policies as a stipulation in your contract. Making sure everyone is covered will help you focus on the task at hand instead of the potential risks that come along with it.
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