Additional Interest vs. Additional Insured: What’s the Difference?
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Written byMandy Sleight
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Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
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Edited byLequita Westbrooks
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Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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An additional interest is someone with a financial stake in your car, home, or apartment. An additional insured is someone you include on your insurance policy to provide them with liability and the option to file claims.
Knowing the key differences between additional interest and additional insured is important because the additional insured has similar coverage protections as the policyholder themself.
Below, we explain who might be an additional interest or additional insured on your home, renters, condo, or auto insurance policy — plus the pros and cons of adding them.
Key Takeaways
An additional interest receives notices of changes, renewals, and cancellations on your insurance policy.
An additional insured has coverage and can file claims under your insurance policy.
Your insurer may list a property manager, lender, or property owner as additional interest, while a co-owner or co-signer would be listed as additional insured.
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Additional Interest vs. Additional Insured: Similarities and Differences
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Have you ever been asked to include a person or company as an additional interest or additional insured to your insurance policy? Although they sound similar, there are key differences between these two terms that you should know about.
An additional interest is a person or entity with a financial stake in an insured property, like your vehicle or home. An additional insured is someone you add to your named insured insurance policy. They aren’t the policyholder, but they have some coverage under the policy.
Below, we explain how additional interest vs. additional insured works on your car, home, renters, or condo insurance products.
Additional Interest vs. Additional Insured: Car Insurance
A common additional interest on a car insurance policy is a lienholder or leasing company through which you finance your vehicle. These companies don’t have direct coverage but can request policy changes to align with a finance or leasing agreement.
If someone co-owns your vehicle — such as a spouse or family member — you’d list them as an additional insured on your auto insurance policy. They’d be able to file claims and be covered for accidents.
Pros and cons for auto insurance
An additional interest doesn’t affect your insurance premium, but an additional insured can. For example, if the additional insured is a listed driver on your policy, the insurance company will use their driving and claims history for rating purposes.
And, since your policy covers the additional insured if they’re in an accident, your rates can also increase if they cause one.
Lienholders typically require certain levels of liability insurance and deductible maximums. So, if your coverage doesn’t match the requirements, they can request a change, which can affect your premium.
Additional Interest vs. Additional Insured: Homeowners Insurance
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If you co-own your home with someone who lives there but isn’t related — such as a domestic partner or friend — they won’t automatically be covered under your homeowners insurance policy unless you add them as an additional insured party.
You can add a mortgage lender as an additional interest or loss payee. Your lender will get notified if the policy changes, renews, or cancels to protect their financial interest in the property.
Let’s look at some pros and cons.
Pros and cons for homeowners insurance
Adding a co-owner or mortgage co-signer to your home insurance policy allows them to file claims and get protection for themselves. For example, if they invite a guest over who gets hurt, they can file a claim for guest medical coverage and liability if they sue. But that could hurt your premiums and create a liability exposure.
Lenders can purchase what’s known as “force-placed insurance” on your behalf and require you to pay for it if your homeowners insurance policy lapses. It typically costs more than getting insurance yourself and doesn’t cover your belongings, but adding a lender as an additional interest can prevent this from happening.
Additional Interest vs. Additional Insured: Renters Insurance
Your rental agreement might require you to have renters insurance. If it does, the property management company, landlord, or property owner may want to be listed as an additional interest for liability purposes.
If your significant other is another tenant in your rental property, you can cover their personal property and liability under the same insurance policy as an additional named insured.
Consider the pros and cons of adding an additional party of interest to your renters insurance policy.
Pros and cons for renters insurance
Adding your property manager or landlord as an additional interest is an easy (and free) way to show you have the liability coverage they require. They’ll get a notice when your policy renews or if it cancels, but they can’t make changes without you knowing.
Listing your significant other as an additional insured can be more affordable than having them get their own insurance policy. But the protection they receive means they can file insurance claims — which can ultimately affect your insurance premium.
Additional Interest vs. Additional Insured: Condo Insurance
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Like home insurance, you could add a roommate or life partner who lives with you to your condo insurance as an additional insured status for coverage and claims purposes.
When you own a condo, it’s common to add a lender and your condominium association as additional interest since both have an insurable interest in the property.
Weighing the pros and cons of adding additional parties may help if you’re considering a condo purchase.
Pros and cons for condo insurance
Adding an additional insured could affect your premiums since age and claims frequency factor into the policy cost. It might be worth any premium adjustment for them to have coverage and the ability to file claims, but making a claim could also affect your premium.
Your insurer will notify an additional interest of policy changes, cancellations, or renewals, but they won’t have coverage under the policy.
Additional Interest vs. Additional Insured FAQs
Below, we answered the most common questions about the different ways to include an additional interest or additional insured on your insurance policy.
What does it mean to add an additional interest to an insurance policy?
An additional interest is someone who has a financial interest in your property, whether it’s your vehicle or home. Adding your lender or property manager to an insurance policy means they get a notice if your policy is canceled or renewed. It also proves you have the insurance coverage your rental or loan agreement might require.
Who should be listed as additional interest?
You should list any third party requiring you to have insurance as an additional interest. That could be your landlord, homeowners association, property manager, lender, or leasing company. Adding an additional interest is usually free, and they’ll get a notice if you change, cancel, or renew your policy.
What is the additional interest liability?
An additional interest, like a landlord or property manager, wants to know that you have insurance for liability purposes. They want to ensure you have coverage if you cause property damage to another unit. Adding them as an additional interest on your renters insurance provides proof of liability insurance.
Why would a company want to be named as an additional insured?
A company with a financial stake in your property would want to be named as an additional insured. In this scenario, the additional insured can make changes and file claims under the policy. Adding the company proves the property is protected against financial loss for an insurance claim.
What is an additional insured endorsement?
An additional insured endorsement is a change or addendum to your insurance policy. Adding an additional insured gives them coverage under your policy that they wouldn’t automatically have. You might add a roommate, domestic partner, property co-owner, or co-signer as an additional insured.
Sources
NOLO, “Federal Laws That Cover Force-Placed (Lender-Placed) Insurance,” Accessed November 20, 2023.
Justia, “Homeowners' Association and Condominium Insurance,” Accessed November 20, 2023.
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Mandy SleightInsurance Writer
Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
Lequita WestbrooksSenior Editor
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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