What does the term additional insured mean?

The term "additional insured" refers to a status granted to a party that is not the main policyholder but is covered under the insurance policy due to specific circumstances. This status is typically added through an endorsement, which modifies the standard policy to extend coverage to additional individuals or entities.

Having an additional insured on an insurance policy means they are provided protection from certain risks and liabilities that may arise from the operations or actions of the primary insured. This is particularly common in lease agreements, construction contracts, and various business partnerships, where one party may want to ensure protection against claims that could impact their interests.

In essence, the endorsement effectively broadens the scope of coverage by including these additional parties, while not altering the fundamental agreements of the original policy. This is critical as it delineates exactly who is covered and under what circumstances, ensuring that all parties have a clear understanding of their insurance protections.