Definition
An additional insured is a person or entity added to another party’s insurance policy, giving them coverage under that policy for specific risks tied to the named insured’s operations.
In real estate, owners and property managers often require tenants, contractors, and vendors to list them as additional insureds on liability policies.
Why It Matters
Being named as an additional insured allows an owner or manager to access the other party’s insurance coverage if a claim arises from that party’s work or operations.
- Shifts risk away from the property owner
- Provides defense coverage under the third party’s policy
- Supports hold harmless and indemnification clauses
- Reduces exposure to out-of-pocket legal costs
Common Use Cases
- Leases: Tenants name landlord and property manager as additional insured.
- Construction contracts: General contractor lists owner and lender.
- Vendor agreements: Service providers add ownership entities.
- Property management agreements: Managers may be added under owner policies.
How It’s Added
Additional insured status is granted through an endorsement to the insurance policy. A simple certificate of insurance (COI) alone does not guarantee coverage unless the endorsement is attached.
Typical Requirements
- General liability coverage
- Specified minimum limits (e.g., $1M/$2M)
- Primary and non-contributory wording
- Waiver of subrogation
Primary & Non-Contributory
Many contracts require the additional insured coverage to be “primary and non-contributory.†This means the named insured’s policy pays first, without seeking contribution from the additional insured’s own insurance.
Example
A contractor is performing roof repairs at an apartment building. The owner is listed as an additional insured on the contractor’s general liability policy. If a third party is injured due to the contractor’s work, the contractor’s insurer would typically defend both the contractor and the owner, subject to policy terms and endorsements.
Common Pitfalls
- Relying solely on a certificate of insurance without verifying endorsement.
- Failure to confirm coverage scope matches contract obligations.
- Outdated endorsements that limit coverage to completed operations only.
- Insufficient policy limits for project size.
- Assuming automatic coverage without reviewing policy language.
Investor Checklist
- Require written endorsement naming correct legal entities.
- Confirm “primary and non-contributory†wording.
- Align coverage with hold harmless clauses.
- Verify coverage limits meet lender requirements.
- Track expiration dates and renewals.