What’s an Additional Insured on Your Auto Insurance?

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Have you seen the term “additional insured” on your car insurance policy but aren’t sure what it means? Or maybe someone has asked to be listed as an additional insured on your policy. It’s important to understand what it is and how it could affect your insurance policy before adding them.

If someone has partial ownership of your car, they’re eligible for an additional insured endorsement. It’s not automatic, even if they contact your insurance company directly. Companies only add those with an insurable (financial) interest.

Key takeaways

  • An additional insured partially owns or is liable for a car someone else insures.
  • The endorsement is a modification to the named insured’s car insurance policy.
  • The additional insured will receive notifications if you change the policy or it cancels for any reason.
  • Removing them can only happen when they no longer have an interest in the insured vehicle.

What is an Additional Insured Endorsement?

An additional insured endorsement is a modification to your insurance policy that extends coverage to someone not initially named in the policy. Although it doesn’t change your insurance coverage, it gives the additionally insured certain benefits. Even adding someone as an additional insured doesn’t change your right as the named insured.

Who Should be an Additional Insured?

On a personal car insurance policy, there is only one reason someone should get this status. That’s if you co-own a vehicle. 

Co-owned Vehicles

Adding someone as an additional insured of a co-owned vehicle happens when the co-owners aren’t married or live together. For example, it’s possible to add your grandparent or friend who cosigned the loan. 

In this case, they don’t live in the same household or drive the car but have a financial interest in the vehicle. The co-owner also usually has a vehicle and insurance policy. Being an additional insured allows the co-owner to file claims on the insurance policy and have coverage if someone files a claim against the car.

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What is the Purpose of Adding an Additional Insured Endorsement?

Adding an additional insured endorsement protects people or entities under your insurance policy. If someone sues the additional insured, they can file a claim, just like you can, covering legal fees, like attorney’s fees, court costs, and settlements.

For renters and business owners or subcontractors who do work for others, adding an additional insured gives them more protection. For example, if the named insured causes bodily injury, property damage, or economic loss to a third party, the additional insured can access their property or liability coverage. 

A landlord is often an additional insured on tenants’ insurance policies. And general contractors or building owners usually get additional insured status on subcontractors’ or suppliers’ business liability insurance policies.

Additional Insured vs. Additional Interest

Although additional insured and additional interest have similar wording, they mean different things. An additional interest has no coverage under the insurance policy, but they have a vested interest in the car.

For example, if you finance your vehicle, the insurance company will list the lienholder as a loss payee and an additional insured, not an additional interest. They can request you carry full coverage and specific deductible amounts, but they can’t make changes, file a claim, or cancel your policy.

The Purpose of an Additional Interest

The purpose is to inform the additional interest when something changes or happens to your policy. There are a couple of things that happen when including someone as an additional interest in your policy:

  • They get notified if you change your policy, like removing a vehicle or lowering or raising your liability limits or deductible.
  • The insurance company sends them a copy of the policy when it renews.
  • The insurance company will send them a cancellation notice if you cancel the policy or the company does.

Why is this important? If you lease a car, the leasing company wants you to carry full coverage. They might also have a deductible cap, which means you can’t get higher than a $500 or $1,000 deductible. They’ll want to know if you remove comprehensive or collision coverage or increase your deductible higher than your leasing agreement states.

As a co-owner, they want to ensure you maintain insurance and be aware of your coverage. If you remove the vehicle from your policy, they should know so they can secure insurance to protect themselves if the car’s involved in an accident since they can also be held liable.

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How do I Add an Additional Insured to my Car Insurance Policy?

You might be able to add an additional insured to your car insurance policy online. Most often, though, you must speak to the insurance company directly to add an additional insured. The insurer will ask why you’re adding them and can verify they aren’t just an additional interest.

When Should You Remove an Additional Insured?

You should only remove an additional insured when they no longer have an interest in the vehicle. For example, if you sell the car, retitling it to the new owner, or if you return the vehicle when the lease ends.

The insurance company may require proof to remove the additional insured endorsement from the insurance policy. Proof includes a copy of the tag return receipt, bill of sale, or signed title. 

Frequently Asked Questions

Does adding an additional insured cost more?

Adding them to your auto insurance might cost more, depending on the type of policy and the reason for the addition. Speak with your agent or check with your insurance company to see if making this change will increase your premium. 

Can an additional insured cancel a policy?

The additional insured can request to cancel a policy. Typically, the insurance company will notify the named insured to confirm the cancellation before processing it. If the policy cancels for any reason, they will receive a notice of cancellation.

Does the additional insured have the same rights as the insured?

The named insured has full rights to their policy’s benefits and coverage. The additional insured has the right to file a claim for damages. Giving someone this status can also entitle them to certain benefits or coverage, but they don’t have the same rights as the named insured.

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