It’s a common misconception that coverage is extended to Additional Insured’s on all types of policies. But it’s important to note that an additional insured is not the same thing as a named insured.
I was recently notified by an additional insured (AI) of a complaint that was filed against them by a member of the board of directors. Not that it makes any difference, but this AI worked for a professional service organization that provides services to the insured and they didn’t want their insurance involved.
The (AI) knew they were identified on my insurance policy and wanted the insurance policy to defend them. But let’s think about this. As the owner of the policy, are you wanting your policy to defend someone that you are going after? Not at all and that’s exactly why coverage is not afforded to Ais in the same manner as it is to named insureds.
This is a common misconception of the coverage afforded in an insurance policy to an “Additional Insured” (AI) and a good example of why AI status should not be relied upon as providing insurance coverage.
An (AI) is protected for their actions if brought into a lawsuit in conjunction with an action against the named insured of a policy. But an AI is not the same as a named insured (NI).
To say it better, the NI & the AI must be aligned in an action against an opposing party for protection to be extended. The insurance contract is between the NI and the insurance company, no one else. Only (NI) status places a party in that primary relationship with the insurance company affording coverage.
An insurance company cannot side with an AI over a NI and certainly cannot defend an AI against a NI. That would be a conflict of interest.
In this case, in order to be protected, the (AI) should involve their insurance company since they are in a (NI) relationship with them.
Please do not rely on AI status in working relationships. If you need coverage for a service you are offering then it is up to you to ensure that you have a General Liability policy in place naming you and/or your organization as the named insured to ensure that you have adequate protection.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
