Sometimes another business or person asks to be added as an additional insured on your insurance policy. On the outside, this sounds super straightforward. But then you start signing contracts, adding people to your policy, and suddenly you’re wondering, “Okay…but what coverage do additional insureds actually get?”
This is probably one of the top three most misunderstood parts of small business insurance, but knowing the difference can keep you compliant (and your claims covered).
Key Takeaway
An additional insured (AI) is a person or business added to your liability policy, ensuring they’re protected if they’re named in a claim arising from your work, operations, or actions. They get shared protection, not full ownership of the policy.
What Coverage Do Additional Insureds Typically Receive?
Additional insureds only receive coverage for liability claims that stem from your work, not theirs. This means that if your business caused an accident, your additional insured could potentially take some heat for it.
For example, vendors typically add an event planner or venue as an additional insured, while a hair stylist might add their salon or suite manager as an additional insured.
In most cases, an additional insured only receives coverage for:
- Bodily injury or property damage caused by your business
- Defense costs when they’re pulled into a claim because of you
If you cause an accident on someone else’s property while you work, the property owner could also be named in a claim because they agreed to let you work there. If you partner with another business (or associate your business with someone), they may want additional insured status in case your claim brings them into a lawsuit.
Think of additional insured coverage like an umbrella that covers them only when they’re standing close to you.
Primary & Noncontributory, Waiver of Subrogation — Do They Apply?
Many contracts ask for “primary and noncontributory” wording or a “waiver of subrogation.” If someone is asking for these, they’re basically saying, “Hey, if something happens, can your insurance please handle it first and also not chase down our insurance afterward?”
These are types of endorsements (add-ons to your policy). Most people you add as an additional insured only require you to have these add-ons because their insurance requires it. Their insurance doesn’t want to be responsible for paying out on any claims you cause — they want your insurance to take full responsibility.
Your liability policy doesn’t automatically give an additional insured coverage for either of these endorsements. It must be specifically added to your policy. It all sounds pretty technical and complex, I know. But the good news is, these two endorsements cost most of our customers around $20 each per year.
What Additional Insureds Usually Don’t Get (Common Limitations)
Let’s be honest. Half of the confusion around insurance comes from people assuming they’re covered for everything under the sun. Additional insureds are no exception for this!
Every coverage has boundaries and exclusions, and additional insureds typically do not get:
- Coverage for their own negligence (if they are solely at fault, your policy won’t step in)
- Coverage for professional liability, workers comp, auto, or property damage to their own belongings
- Ability to change the policy, file claims unrelated to your work, or access your entire insurance record
- More control than you (the named insured always receives the widest protection)
- Higher limits than you (they share your limits)
Additional Insured vs Named Insured vs Certificate Holder: Quick Comparison
There are several names you may see on a Certificate of Insurance. “Named insured,” “additional insured,” “certificate holder,” may sound like someone copied and pasted the same phrase three times and just moved the adjectives around.
The easiest way to remember them is by who plays what role:
- When you buy the policy, you are the named insured
- When someone else wants protection under your policy, they become an additional insured
- When someone just wants proof you have insurance (but not coverage), they’re a certificate holder
| Name | Who They Are | How It Works | Common Examples |
|---|---|---|---|
|
The main policyholder |
Full coverage and control of policy |
– You |
|
|
Added for liability protection tied to your work |
Limited, specific coverage |
– Venue |
|
|
Listed as someone who receives proof of insurance |
No coverage |
– Event organizer |
Think of it like inviting people to a party:
- Named insured: You’re hosting. It’s your house, your rules, your snacks!
- Additional insured: They get to come inside and hang out, but only in certain rooms
- Certificate holder: They’re just checking the invitation (but not actually attending)
So when someone asks, “Can you add me to your insurance?” Your next question should be, “Do you need to be a certificate holder or an additional insured?” Because those two little terms change everything about the protection they expect, and the protection your policy actually provides.
Pro Tip: An additional insured can also be a certificate holder, but a certificate holder is not the same as an additional insured. Naming someone on your policy as an additional insured exclusively grants them coverage, while certificate holders are simply requesting proof of coverage.
Certificate of Insurance vs. Endorsement
If you couldn’t tell by now, the insurance world loves to have its own terminology:
- A Certificate of Insurance (COI) shows that a policy exists
- An endorsement actually changes the policy
A COI alone does not give anyone additional insured status. Coverage only applies when the correct endorsement is added. This means your policy is changing to extend coverage to another party you’re listing (but you’re not giving them their own limits or making them a named insured!).
3 Real-World Additional Insured Examples
Real situations, real claims, real coverage differences. Here is how additional insured coverage works in the wild:
1. The Event Venue
The accident: You’re hired for a gig. Someone trips over your equipment.
The result: The venue gets sued.
How the AI works: Your policy steps in to protect the venue because they’re an additional insured. Someone tripped on their property because of your equipment.
2. The Retailer
The accident: You start selling your handmade soap in a local boutique. Someone claims they had an allergic reaction to it.
The result: The customer sues both you and the boutique for their injuries.
How the AI works: Because you listed the boutique as an additional insured, they’re covered for a lawsuit your product triggered.
3. The Vendor Booth
The accident: A vendor scratches the flooring during setup.
The result: The venue blames the vendor and event planner for the damage.
How the AI works: The damage to the building is covered since the vendor listed the venue as an AI, but only for damage the vendor caused.
How to Add an Additional Insured
You can easily add additional insureds to an Insurance Canopy policy in two ways:
- During checkout, when you buy a policy
- Anytime, online, by logging in to your online dashboard
Once you have a policy, you can add, edit, or remove additional insureds from your policy whenever you need as you work in various places with different people.
Start adding additional insureds to a policy today with Insurance Canopy. Get a policy, add AIs, and get a copy of your Certificate of Insurance within minutes!
FAQs About Coverage for Additional Insureds
Does an Additional Insured Get Coverage For Their Own Negligence?
No, an additional insured does not get coverage for their own negligence. Additional insureds are only covered for their connection to your business activities.
Will Adding an Additional Insured Increase My Premium?
No, adding an additional insured will not automatically increase your premium. Many policies offer the option to add additional insureds at no extra charge.
Depending on the type of policy, you may have a small charge for each additional insured you add to your policy (or a blanket yearly fee to add unlimited additional insureds).
Does an Additional Insured Share My Limits?
Yes, additional insureds share your limits. This means if you pay out on a claim for both you and an additional insured, you can only cover the costs up to your “per aggregate” limit (aka per claim limit).
Can an Additional Insured File a Claim Directly?
Yes, an additional insured can file a claim directly with your insurance company. However, it can only work for incidents tied to your operations. If your business didn’t cause an incident that relates to them, the claim would likely be dismissed.
Do I Need Both a Waiver of Subrogation and AI Wording?
You may need both a waiver of subrogation and AI wording on your policy, depending on the insurance requirements or contract. These do different things, so be sure to clarify with the person requesting additional insured status exactly what it is they need.
Does AI Coverage Follow Me Wherever I Work?
AI coverage can follow you wherever you work, but you’ll always want to double-check contract requirements first! Make sure you have the correct additional insureds added based on the project, event, location, or client.
If a non-renewal happens, you will receive a Letter of Non-Renewal either by email or mail at least 30 days in advance of your policy expiration date. This should give you time to start shopping around for a new policy to avoid any gaps in coverage.
