Additional insured endorsements in commercial auto insurance

An additional insured endorsement is a provision added to an insurance policy that extends coverage to a third party — like an individual or business owner.

Many small businesses use additional insured endorsements to extend their commercial auto insurance coverage to business partners or other third parties. For example, a delivery company might add a vendor as a named insured when transporting goods on their behalf to ensure both parties are covered in the event of an accident.

There are several different levels of additional insured endorsement coverage. For example, instead of naming specific individuals or entities, a blanket additional insured endorsement automatically extends coverage to any third party or business it is contractually required to insure.

A limited coverage endorsement covers the additional insured only for specific risks, such as liabilities from the use of a business’s insured vehicles. In contrast, a comprehensive coverage endorsement provides broader coverage, which may include vandalism and other incidents beyond vehicle accidents.

Additional insured coverage can also be primary or non-contributory. If it is primary, the policy will respond first to a claim up to its policy limits before other insurance policies are involved. If it is designated non-contributory, the policy will not seek contributions from other policies.

Note that there is a difference between an additional insured and loss payee. An additional insured is a party added to your policy who receives liability protection, while a loss payee is a party with a financial interest in the insured property, like a lender or leasing company. In the event of an accident, the loss payee will receive claim payments first.

If a lawsuit that is within the scope of coverage is filed against the additional insured due to a business-related incident, the policy will cover the cost of the legal defense, including attorney fees, court costs, and settlements or judgments up to the policy limit.

If an incident occurs, an additional insured endorsement provides critical financial protection against claims for which the additional insured might be held liable, potentially avoiding costly payouts.

An additional insured endorsement can help businesses develop partnerships and secure contracts. Many companies and contractors will only agree to work with a business if they can be covered as an additional insured under a policy.

Commercial auto insurance provides vital protection for businesses that use company-owned vehicles in their operations. If a business vehicle is involved in an accident, the costs can quickly add up without coverage, which could force a business into bankruptcy or closure.

Commercial auto insurance policies can cover:

• Legal bills
• Bodily injuries
• Medical expenses
• Property damage
• Accidents involving uninsured motorists
• Physical damage and collisions

Commercial auto insurance is required by law in nearly every state, with New Hampshire being the sole exception. All businesses — including self-employed individuals and independent contractors — must have this coverage if they own a business vehicle.

Besides the legal requirement, commercial auto insurance is also essential for financial protection since personal auto insurance policies typically don't cover business-owned vehicles.

For small businesses that don’t use business-owned vehicles, coverage can be obtained with hired and non-owned auto insurance (HNOA). This type of policy covers personal, leased, and rented vehicles that are used by a business. For example, a florist might use their personal car or rent a van to make deliveries during busy holidays, like Valentine’s Day.

When a business takes out a commercial auto insurance policy, it is the main policyholder. Policies typically have certain limits and deductibles, and insurance premiums are calculated based on a number of factors, including the size of the business and its location.

A commercial auto additional insured endorsement extends coverage to another party, such as a contractor or vendor, for liabilities that may occur from the third party's use of the vehicle. This offers crucial protection to the policyholder if the additional insured is involved in an accident and the policyholder is sued.

If a business partner needs assurance that it's covered under a business's commercial auto policy, a "designated insured endorsement" can be used to name the business partner as an insured party under the policy.

Proof of insurance can be obtained with a commercial auto additional insured form. This form also ensures that the policyholder is protected from vicarious liability involving their vehicles, which is when one party is held responsible for the actions of another party.

Any business that uses company-owned vehicles in its operations should get commercial auto insurance as part of its risk management strategy to protect against financial expenses from accidents, property damage, and liability claims.

However, there are a few types of businesses that make use of additional insured endorsements with a business auto policy more than others, including:

Construction businesses should add subcontractors to their commercial auto policies to protect their construction vehicles, which are often expensive.

For example, if a general contractor has a subcontractor on their team who drives a company-owned truck or other covered autos to a job site, that individual could accidentally rear-end another vehicle at a stoplight.

By establishing the subcontractor with an additional insured status, the business ensures liability coverage extends to the subcontractor’s actions, protecting both the company and the subcontractor. The policy can also protect construction vehicles in the event of a fire or vandalism.

You may need to add additional kinds of endorsements to your auto policy, depending on the types of vehicles and equipment you need insured. For example, if you need protection for "non-auto" mobile equipment, such as a forklift or tractor, you should consider a mobile equipment endorsement.

Landscaping businesses should add subcontractors they work with as additional insured endorsements to their commercial auto policy.

For example, a subcontracted landscaper driving a truck to a client’s property could cause an accident, which injures the driver of another vehicle. If the landscaping business is named in a lawsuit due to vicarious liability, an additional insured endorsement on the commercial auto insurance policy will provide crucial protection by covering the injured driver's medical payments and related liability costs.

Cleaning business employees typically go from one work site to another in company-owned vehicles. To protect their vehicles from accidents or vandalism, they should get commercial auto coverage.

If a cleaning company hires subcontractors, it should add them to their commercial auto policy as additional insured endorsements. This protects both the cleaning business and subcontractors in the event of a vehicle accident.

Consultants who travel to their clients’ homes and other businesses should get commercial auto coverage in case they get into an accident with an uninsured motorist or damage another person’s vehicle. In order to secure a contract with a client, consultants may be required to add them as additional insureds onto their auto policy.

Adding additional consultants or additional insureds to a commercial auto policy will cause the premium to increase. The pricing will vary though depending on how many consultants or additional insureds are added, the policy terms, loss history, and other risk factors the insurance company will consider.

It's easy to get affordable commercial auto insurance with Insureon. Just fill out our easy online application to receive quotes from trusted providers. Our expert insurance agents are available to help answer any questions about pricing, policy limits, exclusions, and coverage options.

Licensed Insureon insurance agents can also help small businesses get additional insured endorsements on other policies, like commercial general liability insurance and commercial property insurance. They can also help you select other insurance coverages, like workers' compensation and professional liability.

Most businesses can get same-day coverage and easily download a certificate of insurance as proof of coverage right away.