Restoration Insurance: What is an additional insured?

Restoration contractors often need to obtain certificates of insurance that include another party listed as an additional insured. What is an additional insured anyway? And why do I need to have them listed on the certificate?

Per IRMI (International Risk Management Institution): An additional insured is a person or organization not automatically included as an insured under an insurance policy included or added as an insured under the policy at the request of the named insured.

A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., wanting to protect church members performing services for the insured church) or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of the property leased by the named insured).

In liability insurance, additional insured status is commonly used in conjunction with an indemnity agreement between the named insured (the Indemnitor) and the party requesting another insured status (the indemnitee). Having the rights of an insured under its indemnitor’s commercial general liability (CGL) policy is viewed by most indemnitees as a way of backing up the promise of indemnification.

Suppose the indemnity agreement proves unenforceable for some reason. In that case, the indemnitee may still obtain coverage for its liability by making a claim directly as an additional insured under the indemnitor’s CGL policy. In property insurance, another insured status is most often used in conjunction with a premises lease agreement between the named insured as the lessee and the owner of the leased building, in which the insured tenant is required to purchase insurance on the leased building and call the building owner as an additional insured on the insurance policy concerning the leased building.