Seems to not really have much importance, the way you are named in an insurance policy; until you are told that you are not covered!
We get requests all the time for people or entities to be added to an insurance policy as an ‘insured’. The only ‘insured’ however would be automatic insureds.
When you are ‘added’ to an insurance policy, you are either going to be a ‘Named Insured’ or an ‘Additional Insured’.
What is the difference?
A Named Insured is the owner of, and has all the rights to, an insurance policy. Remember, an insurance policy is a legal contract, and as such has certain requirements and built-in protections.
However, if you are not a ‘Named’ insured on a policy, legally you do not have access to the billing or coverages, no rights to make any changes, and can’t submit any claims for losses.
We run into this often when looking at insurance where a married couple, somewhere along the way, were told to ONLY list one of them to protect the assets of the other. This simply isn’t the case. There are many times where you have ‘automatic’ liability in situations simply because you are married to someone, so why wouldn’t you want insurance and defense protection to step in and take care of you when sued or need to turn in a claim?
Do agents allow people to turn in claims or get information on policies for which they aren’t shown as a ‘named insured’? – All the time! Doesn’t make it legal, or right.
Many times, we have situations where a parent is trying to help their child with their insurance, or vice versa, and they contact us to make a vehicle change or to get billing information, or even to turn in a claim. In these cases, we do require that our ‘named insured’ provide to us a letter of authority naming any individuals who may contact us regarding their insurance. Without taking this extra step, not only could we inadvertently make a change that the insured does not want made, we could also be brought into a lawsuit if coverage changed or personal information was disclosed without our client’s permission.
We add ‘Additional Insureds’ most often when we have a lienholder or mortgage requirement to fulfill. This means that the policy copy is sent to that entity and they are paid first when a claim occurs, so that you don’t have a situation where you have a total fire loss and take the entire check vs paying off your mortgage or lien first.
We also add ‘Additional Insureds’ many times in business insurance to satisfy the liability requirements of landlords, or people our clients into contracts with, such as contractors building your home, or fixing your roof.
This article is being written simply to help educate you to make sure that when you have ownership of an item or have a legal insurable interest in the way of a contractual or financial agreement, that you are listed on the policy correctly to make sure you are protected for liability as well as the property involved in said contract.
As always, we are more than happy to help answer any questions you may have regarding named or additional insureds.