Q&A With Fox Rothschild Partner Carl Anthony MaioApril 2015 – Articles In the Zone
Q: I recently read your article from the January 2015 issue of In the Zone regarding certificates of insurance and landlord /tenant /buyer being added as additional named insured. The landlord and or tenant or buyer/seller can be added as additional insureds but adding them as additional named insureds would require proof of commonality. Could you please elaborate on the distinctions between additional insureds and additional named insureds?
A: Thank you for your comment about the In the Zone article on Certificates of Insurance. The two principles intended to be addressed are the propositions that: (1) Certificates of Insurance require more than just naming a party or entity as a Certificate Holder, and (2) an affirmative undertaking must be made for defense and indemnity. Insurance industry-accepted and judicial case law-tested terms are a good place to begin.
An “additional insured” is a person or organization not automatically included as an insured under an insurance policy but for whom insured status is arranged, usually by endorsement. A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party or to comply with a contractual agreement requiring the named insured to do so. A good example is an owner of property leased by the named insured. This is the most common approach accepted by underwriters.
An “additional named insured” (ANI) is a person or organization, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations. An ANI is added to a policy after the policy is written with the status of named insured. This entity would have the same rights and responsibilities as an entity named as an insured in the policy declarations. The contrast between the two is that the person or organization is added to a policy as an insured but not as a named insured. The test is “insurable interest,” which is in the value of the subject of insurance, including any legal or financial relationship resulting from property rights, contract rights and potential legal liability. This also allows the ANI to be placed on notice by the underwriter if the policy is cancelled, changed or premiums have not been paid. This is customarily accomplished by a policy endorsement and explains the cautionary language in the pre-printed Acord Form.