# Naming/being named additional insured



## orson (Nov 23, 2007)

MGSProperties said:


> I think you are missing the point of what it means to be named an additional insured on a policy.
> 
> When they name an additional insured they are stating that as soon as your policy becomes null they will notify the additional insured immediately. So if you decide not to pay your premium, your insurance company will notify all the additional insured that the policy is about to expire. This costs money to track and to notify and will usually end up as a charge from the insurance company to the insured. The only time I have seen this not be a charge is when the policy premium is high enough for the insurance company so it does not warrant an extra charge.
> 
> So if you are telling me that your insurance company does not charge you I would get a couple of new quotes and see where you stand.


That is most definitely NOT the point of what it means to be named additional insured.

A contractor (or homeowner) is named additional insured so that a negligent act that damages person or property is indemnified firstly by the party that caused the damage.

Example: Tom Dick and Harry's drywall is working on my jobsite and they name me additional insured. 

They drop a sheet of drywall on the HO's cat and crush it.

The HO sues TD&H for 4.9 billion dollars and sues me for 6.3 trillion.

Judge awards HO 500k from TD&H and 1mil from me. (it was a cute cat)

TD&H's insurance company, We'reThereForYouTillYou'reScrewed Inc. pays out 500k to cover TD&H and also pays out 500k to cover me and reaches their coverage limit.

My insurance company covers the last 500k (and drops me, but that's another story)

If I weren't listed as additional insured TD&H's insurer would not have to pay any damages awarded against me.

My GL policy is very reasonably priced despite having no nuisance charges.


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## Mellison (Aug 3, 2008)

orson said:


> That is most definitely NOT the point of what it means to be named additional insured.
> 
> A contractor (or homeowner) is named additional insured so that a negligent act that damages person or property is indemnified firstly by the party that caused the damage.
> 
> ...


That sir was a clever, funny and informative response!


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## MGSProperties (Mar 27, 2008)

orson said:


> If I weren't listed as additional insured TD&H's insurer would not have to pay any damages awarded against me.
> quote]
> 
> that is very correct as well, but my point is that once you are named additonal on policy, the insurance company is also responsible to let you know when or if coverage becomes null. that has costs associated with it as they have to track of all additional insured.


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## Scott Meyer (Jul 24, 2008)

In regards to MGSProperties and the issue with being notified if policy is cancelled. 

A certificate of insurance names a certificate holder. It is only the certificate holder that will receive the notice of cancellation. If a broker wants to deliver A+ service by notifying anyone who has an interest (such as additional insured or the owner), then they are making that choice and good for them. But forms like 'ACORD 25 Certificate of Liability Insurance' which have a certificate holder field were meant to be the list of people who needed notification of cancellation. 

Oddly enough, if your policy has a blanket additional insured endorsement it is possible to be an additional insured without even being a certificate holder or even seeing the certificate of insurance. A blanket endorsement usually grants additional insured status if it is required in a written contract. So if a GC and a HO sign a contract that says the HO must be an additional insured, then the GC insurance policy is automatically granting that status regardless if the HO ever sees a certificate. This also means they would not be informed of a cancellation. 

One other point that has not been addressed. You cannot be listed as additional insured on a workers' compensation policy. It would be too much of a moral hazard if people could pass the responsibility of their employee's safety on to others. Also, the experience modification (a regulated measure) needs to correspond with the insurance payouts. It would get confusing if you were able to pass the buck to someone else and the modification increase. Or alternatively, pass the buck but receive the modification increase yourself.


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## G&S23 (Aug 23, 2008)

Mellison said:


> That sir was a clever, funny and informative response!


+1, especially that "cute cat" part


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