Named Insured vs. Additional Insured Homeowners: What’s the Difference?

Insured Homeowners

Financial Risk management in today’s extremely taxing times has become a necessity and hence, insurance in and of itself is one of the biggest cautions that one can take to avoid incurring any form of uncalculated financial losses. This contract hence enables a reimbursement or safeguards against any future forfeits or other deficits.

Such precautions are needed in our day-to-day lives. One of the most common areas for such precautions is the property that we own. This is where we need-Homeowners Insurance or HOI. This is a multifaceted insurance category covering not just the property’s insurance but also taking care of any other losses under the liability insurance .

For having a better understanding, there are multiple terms which bring to light how the entire process works. Two of the terms which you need to know about are the Named Insured and the Additional Insured. In order to understand your insurance better, you need to understand how these terms are different from each other.

Named Insured

These are typically the person or the group (individual/individuals, businesses, firms, organizations etc) which primarily have their name under the insurance plans which makes them liable to get full coverage under the policy terms. As the name suggests Named Insured refers to the people who have ownership over the insurance policy and hence their names can be seen on the first page of the policy terms.

These people are the people mostly living in or are related; to the property directly. These holders have a lot of perks and responsibilities: they are in direct communication for any policy related amends or other notices like intimation of any form of cancellation etc. regarding the private property. They also yield the power to add in other Additional Insured candidates (Joint ventures, business subsidiaries etc.) and have the responsibility of the payment of the premium in the decided time.

Additional Insured

The status of an Additional Insured in the Homeowner’s policies is given to the people who may have an active interest in the particular property or the private home. This designation is provided to others with the aid of a few endorsements which keep the insurance contract fair and open for any required amends on the request of the concerned Named Insured.

These may include the spouse or the kids or other related people who may or may not be living in the property or house or it may also include the other business subsidiaries who may be investing or are a part of the purchase of the property.

The endorsements which are used here can be of varying nature and mainly recognize the additional party under the blanket additional insured endorsement and they may vary in their nature to add, remove or change the overall coverage.

Named vs. Additional

Both the categories of the Homeowner Insurance are equally relevant and have plenty of benefits. The Named insured party has more responsibilities because of the needs of the policy. On the contrary, Additional insured party enjoys similar benefits while not being subjected to a lot of responsibilities. However, in a situation of crisis where the property might have incurred a loss both the insureds are under the coverage and the amount of that coverage depends on the endorsements under which the Additional insured were incorporated.

For example- the liability insurance bit of the Homeowner Insurance demands the Named insured to report any damage or destruction made to the concerned property but the additional Insured would be exempted from the same although both would be insured in case of any mishaps.

Protecting your property as a Team

Your house and your property need to be well insured and you would always want to have the best plans possible for them. Hence it is important to have the proper knowledge to weigh your pros and cons regarding your property insurance. 

The Additional Insured party can be important in the role they play for the house/property as they could also be subjected to having a say in the payment of the premiums, hence, it’s important to have reliable additional insureds. Also, in conditions where a party is responsible but has coverage under the additional insured, they cannot be held accountable, hence the policy terms should be drafted accordingly.

Named Insured and Additional insured parties need to be on the same page in the process although their coverage may be different to enable a good plan under the Homeowners insurance plan.