The named insured is the person or business who is explicitly named on an insurance contract and is the person who signs the policy with an insurance company. However, there can be more than one named insured on a policy — and if that’s the case, usually the person listed first holds primary responsibility.
Sometimes. As the signed policyholder, the named insured is generally the money person — they’re responsible for purchasing the policy and paying the premiums. However, in some cases, someone else can purchase a policy for you. The same goes for paying premiums.
This is pretty common for certain types of insurance. For example, many employers pay for employees’ auto insurance or health insurance. For business insurance, however, this setup is far less likely.
We know what you’re thinking: “If named insured is so straightforward, why dedicate an entire article explaining it?” Well, because there is often confusion between the named insured, additional insured, and additional named insured, which is understandable.
The named insured is the primary policyholder. An additional insured is a person, organization, or location that the named insured adds to their policy.
In business insurance, an additional insured is generally another person or a larger business that the named insured wants to work with.
For example, if you’re a yoga instructor and want to teach a class at a local gym, you may need to add the gym to your general liability coverage as an additional insured. This protects the gym from additional liability you bring to their business.
However, while the named insured is always covered, an additional insured’s coverage has limitations. In the yoga example, as an additional insured on your liability insurance policy, the gym would not have coverage for every accident that happens on site, only those that directly involve you.
Also, there’s a difference in how each party is added to a policy. The named insured, of course, is explicitly named on the contract from the get-go. The additional insured status, however, is only added at a later date using a additional insured endorsement or rider as the need arises.
Additionally, the named insured is covered for the life of the policy, while the additional insured may only have coverage for a special event or a set period determined by the rider.
Having an additional insured on a policy doesn’t change the coverage for a named insured. It just extends the coverage to another party.
As if that wasn’t enough, there’s also additional named insured. Think of it as a middle ground between named insured and additional insured.
Like the named insured, the additional named insured is explicitly named in the policy. They get the full policy coverage without the limits of an additional insured.
And unlike an additional insured, the coverage they get isn’t limited to a gig or set period of time. As long as the premiums are paid, they’re included in the coverage for the life of the policy.
Essentially, adding an additional named insured is a way of giving someone the full rights and coverage of your policy after it’s been signed. (The first named insured is still the primary responsibility holder though.)
For small businesses, an additional named insured is generally a partner, co-owner, or even a family member of the original named insured. In other words, someone close to the policy owner with the same risks and insurable interests.
As a small business owner, there will be times when you need or want to extend your business insurance coverage to others (or have them extend their coverage to you.) Knowing the difference between named insured, additional insured, and additional named insured can help you make sure you’re covering them how you want when that time comes.
At NEXT, we know that as a small business owner, you might need to add an additional insured or additional named insured at any moment. That’s why we give you 24/7 access to manage your account, update your coverage and download your free proof of insurance in minutes.
You can start a quote, customize your options and access your certificate of insurance online immediately — in about 10 minutes.
