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 common feature of the policy language.
BREAKING DOWN 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 policy coverage to be extended to.
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.
Third parties that provide services to a policyholder may have grounds to make a claim if they experience an injury or some damages. Businesses purchase liability insurance to protect themselves from claims, but whether or not coverage is extended to subcontractors and other third parties depends on the policy language. Some policies may 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.
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 it a certificate of insurance.
Example of how Blanket Additional Insured Endorsements Work
Additional insured status is commonly used to protect one party from certain risks arising out of another party's activities. For example, municipalities typically require additional insured status from anyone holding a public event on city property, such as concerts, parades and carnivals. Such 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 when the crowd gets unruly, both the city and the concert sponsor will likely be sued. As an additional insured under the 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.)