Ask a business owner for their advice, and it won’t be long before they land on this sentiment: expect the unexpected. It’s true. Best laid plans fall apart, and there’s no way to predict the different hurdles your business will need to make it over.
‍
Fortunately, you don’t need to freefall when a wrench gets thrown in. Business insurance can protect you when unforeseen circumstances threaten to throw you off track.
‍
As you consider insurance policies and other risk management options, you’ll likely hear the term “additional insured” come up. But what does this mean? And what do you need to know about it? We have all of your answers right here.Â
What Is an Additional Insured?
An additional insured is a person or group who is covered under an insurance policy, despite the fact that they’re not named in the original policy. With an additional insured endorsement, these people are protected under the original named insurer’s policy and can make a claim if needed, but they aren’t the policyholder.Â
‍
Let’s clarify this with an example. Imagine that you own a pizza shop, and you employ a few delivery drivers. You could name your delivery drivers as additional insureds on your business insurance policy so that they’re covered if something were to happen—for example, they hit a parked car while delivering a pizza.Â
‍
Additional insured coverage is requested on a variety of different types of insurance policies, including commercial general liability (CGL), professional liability, commercial auto insurance, property insurance, and more. However, it’s most commonly requested on a commercial general liability insurance policy.Â
What Is an Additional Insured Endorsement?
A typical insurance policy provides insurance for the parties listed in the policy (which you might hear referred to as the “named insured”). An additional insured endorsement is an amendment to the original policy that extends the insurance coverage to other people who aren’t named insureds in the original policy.Â
‍
Typically, additional insureds fall into two categories:Â
‍
- Named individuals: Additional insureds are listed by name in the endorsement (i.e. your delivery driver, Joe Smith).
- Blanket endorsement: Additional insureds are covered under a general description of the groups that might need coverage (i.e. “Delivery Drivers”).Â
‍
Take note that there needs to be some sort of business relationship between the original policyholder and the person or group they’re adding to their insurance policy. You can’t just add anyone and everyone.
How Do You Get an Additional Insured Endorsement?Â
Getting this endorsement is relatively simple, especially if you work with an insurance agent who can guide you through the process.Â
‍
How you get an additional insured endorsement added to your own insurance will depend on your insurer, your specific insurance policy, what type of endorsement you need, and more. But generally, it works like this:Â
‍
- Know who you want to add as an additional insured and whether or not you’ll name them or get a blanket endorsement
- Connect with your insurance agent to understand if an additional insured is an option with your existing policy
- Fill out an additional insured endorsement form, which you should get from your insurance company or your insurance agent
‍
If all goes well, the additional insured endorsement is typically added as a separate document (in other words, an amendment) to your original insurance policy. Once that amendment is added, the people or groups you listed achieve additional insured status.Â
Do Certain Industries Use Additional Insured More Than Others?
Additional insureds are common in a variety of industries and businesses. Let’s look at a few places where you’ll see these crop up most frequently:Â
‍
- Large Companies: Bigger companies who have business relationships with small businesses will often request to be added as an additional insured on the smaller business’ policy. Since most big businesses often work with numerous different types of smaller companies, it’s typically easier for them to be added to the small business’ policies rather than needing to add every small business to their own policy.
- Housing and Building: There’s a lot of risk and potential for lawsuits in this industry, which means additional insureds are commonplace.
- Landlords: Commercial building landlords will often request to be added to their tenant’s insurance policies.
- General Contractors: General contractors might request to be added as an additional insured on their subcontractor’s insurance.
- Manufacturers: Those who produce items that are sold by other sellers frequently add their sellers to their insurance policies so that they’re covered by their product liability policy.Â
‍
That’s by no means an exhaustive list, as additional insureds happen in many other industries. However, the above are definitely frequent users of these types of endorsements.Â
Does It Cost Something to Add an Additional Insured?
Yes, since this endorsement extends insurance coverage to other people or parties, there is a cost associated with it. However, it’s typically pretty minimal and a substantially lower cost than a standard policy premium.Â
‍
How much it costs will depend on your policy and the type of endorsement (blanket versus named individual) you’re adding. Most insurance companies charge per additional insured, starting at $25 per policy term, with a typical policy term being one year.Â
‍
To get the specifics on how much this will cost you as a business owner, connect with your insurance agent or insurer.Â
Why Is an Additional Insured Important?
Because this comes at a slight cost, we can’t blame you if you’re wondering about the benefits of an additional insured.Â
‍
Fortunately, the biggest advantage is relatively straightforward: It provides more protection. If you have individuals or groups doing work on behalf of your business, they’re covered under your (as the original policy holder) insurance.Â
‍
Let’s return to our example of a pizza delivery driver. If your driver caused some sort of property damage—let’s stick with our example that he hit a parked car on his way to deliver a pizza—he’d be protected from any lawsuits or other fallout by your insurance policy, because he was added as an additional insured.Â
‍
It’s important to note that this liability coverage is only applicable when the additional insured is doing work on behalf of the original policyholder. If your delivery driver hit a parked car while running a personal errand, then he wouldn’t be covered by your insurance policy—because he wasn’t working on your behalf at that point.Â
Can an Additional Insured File a Claim?
Yes, since an additional insured is covered by the insurance policy, they can file a claim. However, more frequently, the original policyholder is the one who files a claim on behalf of the additional insured. If you need to make a claim, your first step is to contact your insurance company and provide the details of what happened.Â
‍
The claims representative will give you the appropriate directions on how to file your claim, whether they do that for you over the phone, point you to a specific website, or send you some paperwork to fill out and submit. That differs from insurer to insurer and policy to policy.Â
‍
While you can make a claim as an additional insured, it’s still best for business owners to have their own insurance policies. In fact, it’s common for clients, lenders, subcontractors, or any business that you’re doing work with to request that you carry appropriate insurance and provide proper proof of that coverage (in the form of a certificate of insurance).Â
Has COVID Presented Any Changes for Additional Insured?
The COVID-19 pandemic has turned the world on its head. The insurance industry hasn’t been immune to change, particularly when it comes to business interruption insurance. However, with that regard to additional insureds specifically, not much has changed.Â
‍
Why? Well, most standard commercial policies have fine print that excludes losses caused by viruses, bacteria, and pandemics—something that many insurers put into practice after the SARS outbreak in the early 2000s.Â
‍
With that said, insurance companies that didn’t explicitly exclude pandemics from their policies will likely carefully review how much coverage an additional insured gets (and whether or not they’re charging enough for that coverage).
‍
But, on a broader scale, there haven’t been many shifts for additional insureds amidst the continuing pandemic.Â
Protect Your Business Against the Unexpected
You can’t predict everything, and that’s why appropriate insurance coverage is so important for your business.Â
‍
If you have business relationships with other people or groups who work on your behalf, it can be a wise move to add them to your insurance policy with an additional insured endorsement.
‍
It sounds fancy, but it doesn’t need to be that complicated. Use this as your guide to understand the basics. When you’re ready to move forward, contact an insurance agent or your insurance company to figure out your best next steps—and then rest easy with some added peace of mind.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
Sample
Text Copied to Clipboard
Copy

Hello Jane,
‍
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
‍
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
‍
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
‍
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
‍
I look forward to speaking with you soon.
‍
Cheers,
‍
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
Sample
Text Copied to Clipboard
Copy

Hi Jane,
‍
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.Â
‍
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
‍
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
‍
Again, thank you for your time today. I look forward to working with you in the future.
‍
Cheers,
‍
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
Sample
Text Copied to Clipboard
Copy

Hi Jane,
‍
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
‍
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.Â
‍
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
‍
Thank you again for choosing ABC Agency to insure Jane's Bakery.
‍
Cheers,
‍
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
Sample
Text Copied to Clipboard
Copy

Dear Jane,
‍
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
‍
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
‍
Do you want to discuss any of these policies?
‍
Cheers,
‍
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
Sample
Text Copied to Clipboard
Copy

Hello Jane,
‍
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
‍
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
‍
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
‍
Would you like me to work up a quote for you?Â
‍
As always, thanks so much for being a part of the ABC family.
‍
Cheers,
‍
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
Sample
Text Copied to Clipboard
Copy

Hi Jane,
‍
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
‍
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
‍
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
‍
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
‍
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
‍
Thanks so much for your help!
‍
Cheers,
‍
John Doe
7. Policy RenewalÂ
If your client needs to renew their policy with you, send an email like this:
Sample
Text Copied to Clipboard
Copy

Hi Jane,
‍
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
‍
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.Â
‍
If you're still happy with the coverage, we can easily renew it for you.Â
‍
Do you have some time to chat this week?
‍
Looking forward to serving you again!
‍
Cheers,
‍
John Doe