Additional insured endorsements in commercial property insurance

An additional insured endorsement extends insurance coverage to a third party you work with, like a business partner or client. It is often added to a business insurance policy as part of its risk management strategy.

An additional insured endorsement is commonly used to protect both the policyholder and additional insured against accidents or other claims while working together to ensure a good business relationship.

For example, a small business might add a vendor as an additional insured to its general liability policy to fulfill contractual requirements and to provide them with liability protection related to its operations.

An additional insured endorsement offers many different levels of coverage. For example, a blanket additional insured endorsement automatically extends coverage to any third party the policyholder is contractually required to add as an additional insured.

An additional insured can also be for a specific individual or business, although coverage isn’t automatic and each entity must be named in the policy’s declarations page.

While both an additional insured and a loss payee can be listed as third parties on an insurance policy, they are not the same.

A loss payee is a party that is entitled to receive payment if insured property is lost, stolen, or damaged. For example, a lender financing a vehicle might be listed as a loss payee on a commercial auto policy to ensure they are compensated if the vehicle is involved in an accident.

A commercial property insurance policy protects businesses from financial losses involving their buildings, equipment, inventory, and other property. Coverage typically includes protection against property damage due to fire, theft, vandalism, and liabilities so a business can quickly recover with minimal disruption.

A third party — like a property manager or property management company — can be added as an additional insured. Contractors, subcontractors, or vendors operating on the property can also be added as an additional insured on a commercial property policy to provide protection against liabilities related to their activities.

Adding a property manager as an additional insured protects against liabilities related to their management activities on the insured property.

For example, if a tenant or visitor files a claim for an injury that occurs on the property due to a maintenance issue, the property manager would be covered under the policy for their role in managing the property. Similarly, adding a property management company as an additional insured extends coverage to the company.

In addition to adding an additional insured on a commercial property policy, a third party could also be listed as an additional interest. An additional interest is a lender, lien holder, or other entity that has a financial interest in the property and needs to be kept informed about policy changes, such as cancellations, renewals, or lapses in coverage.

An additional interest does not receive liability coverage under the policy. Instead, it helps to ensure their financial stake in the property is protected by notifying them of any significant policy changes that could impact their investment.

An additional interest for a commercial property insurance policy is typically listed on an "Evidence of Commercial Property Insurance" form, ACORD 28.

Anyone who owns or rents commercial property for business purposes should consider a property additional insured endorsement.

Property owners should consider adding additional insureds to their property insurance when using the services of property managers, contractors, or other companies that operate on their properties. Businesses that rent property should also consider requesting an additional insured endorsement to ensure they are protected from liabilities related to the property owner or management's activities.

Although many businesses benefit from additional insured endorsements, there are a few professions that use them more than others, including:

Additional insured endorsements benefit many real estate businesses.

Commercial landlords and property managers may require property owners to add them to a commercial property insurance policy as an additional insured. For example, a property manager who oversees multiple properties might store equipment on-site, like lawn mowers, snow blowers, or tools.

Being listed as an additional insured by the building owner provides the property manager with protection against liabilities from injuries caused from the presence of those tools and equipment.

Retail businesses, wholesalers, and manufacturers should consider obtaining additional insured endorsements in their commercial property coverage to protect their business partners.

For example, if a contractor working on a retailer's property accidentally damages equipment belonging to a manufacturer, an additional insured status will provide liability protection to the contractor for insurance claims related to the incident.

Construction is an industry where multiple parties often work together on a project. Construction companies should obtain additional insured endorsements in their commercial property coverage to protect general contractors, subcontractors, project managers, vendors, and others from liabilities.

For instance, if equipment operated by a subcontractor causes accidental damage to someone’s property during construction, the additional insured endorsement will protect the subcontractor from liability claims.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. insurance providers and find the right business property coverage. You can also consult with an insurance agent on your coverage options and the types of insurance your business needs.

Once you find the right policy for your small business, you can begin coverage and get a certificate of insurance in less than 24 hours. Licensed insurance agents can also help small businesses get additional insured endorsements on other policies, such as commercial general liability insurance and commercial auto insurance.