Blanket Additional Insured Endorsement

What Is Blanket Additional Insured Endorsement?

A blanket additional insured endorsement is an insurance policy endorsement that automatically provides coverage to any party to which the named insured is contractually required to provide coverage. A blanket additional insured endorsement is most commonly found in liability insurance policies, though it is typically not a feature of the policy language.

Understanding Blanket Additional Insured Endorsement

Blanket additional insured endorsements do not require the named insured to identify the additional insured by name. Instead, the named insured will provide a general description of the type of groups that it wants coverage extended to under the policy.

Businesses often work with a variety of contractors, subcontractors, and other product and service providers in order to complete jobs. For example, a construction company may contract out work to electricians, structural engineers, and HVAC professionals to complete specific components of a building. These contracted workers are third parties who provide services to the business owner or policyholder. The third parties may have grounds to make a claim if they experience an injury or some damages while on the job.

As a result, companies purchase liability insurance to protect themselves from claims. However, whether or not coverage is extended to subcontractors and other third parties depends on the policy language. Some policies might require the named insured to add coverage for other groups by purchasing endorsements. Once added to the policy, the non-named groups are referred to as additional insured.

The additional insured status essentially provides coverage to other groups or individuals that were not initially named in the policy. The additional insured endorsement is helpful because it protects the additional insured–as part of the named insurer's policy–so that a claim can be filed in the event of being sued.

Special Considerations

Insurance companies are likely to list one or more requirements that any party not named in the policy must meet before being granted coverage. A common requirement is that the named insured and the party seeking additional insured status must have entered into a contract or agreement in which the named insured has indicated that it will add another party to the policy. The contract or agreement must be written and may be reviewed by the insurer to determine if coverage is a requirement. If the party is ultimately considered an additional insured, the insurance company will issue the party a certificate of insurance.

Example of Blanket Additional Insured Endorsements

Additional insured status is typically employed to protect one party from specific risks arising out of another party's activities.

Municipalities typically require additional insured status from anyone holding a public event on city property, such as concerts, parades, and carnivals. These activities expose the city to certain risks that would not otherwise exist, so the person or organization that creates the risk should assume responsibility for any losses incurred as a result of the activities.

In the case of a public concert, for example, if someone is injured while the crowd is unruly, both the city and the concert sponsor will likely be sued. As an additional insured under the concert sponsor's policy, the city can tender the claim under that policy instead of having to file the claim under its own insurance. The risk has been effectively transferred to the concert sponsor–assuming the available policy limits are sufficient to cover the claim.