Builders Risk Insurance: What’s the difference between named and additional insureds?

These are the three most common categories of people or entities covered by our builders risk insurance policy. They may sound similar, but each will directly affect the type and scope of coverage available.

It’s crucial to understand the role and responsibilities of each to be properly protected during the course of construction. For instance, when a covered cause of loss occurs, the claims payment check will be issued to all named and additional insureds, as well as lenders, and each will be required to sign it to receive funds.

Check out these definitions to ensure you know the full impact of each insured type on your next Zurich builders risk policy.

Named Insured(s) 

A named insured is the person(s) who purchases the insurance, appears on the declaration page, and has ownership of the policy. They will typically oversee the policy, choose coverage types and amounts, pay premiums, make policy changes and file claims if necessary.

Examples of named insureds include but are not limited to:

• Owner
• Sole proprietor
• Partnership
• Corporation
• And other entities

Additional Named Insured(s) 

Additional named insureds have the same basic rights as a named insured. They can make policy changes and file claims. However, the additional named insured is typically not responsible for premium payments.

Within our online application, you’re occasionally required to enter named insureds under this category if the characters exceed the space limitations in the text box field.

Examples of named insureds are included but not limited to:

• Affiliate
• Partner
• Co-owner of the primary insured

Additional Insured(s)   

Additional insureds may be added to the policy. An additional insured is granted no rights within our policy to cancel or alter coverage and are thereby not obligated to pay premiums. Their name will appear on any claim check issued.

Mortagee / Loss Payees 

Mortgagees and loss payees should always be added if they have interests in the project. They normally require their name to be listed and their name(s) go on the claim check as well. It’s important that the agent does not forget to include them in the policy.

Choosing the Right Policyholder 

Picking the right named insured is critical when completing a builders risk insurance application. But who should you pick?

Our answer: do what’s best for your client. Whether your client is the owner or the contractor, put the policy in their name.

Of course, there are factors you’ll need to consider:

• The policy follows the policyholder. So, if the owner and contractor have a dispute, the policy will remain with the named insured.
• The property owner and contractor should not have two separate builders risk policies as this is duplicate coverage.
• Coverage can differ based on your insurance provider, so be sure to review the benefits and exclusions relating to your policy.

Now that you can identify insureds with confidence, the next step is choosing a policy. Quickly learn how to select the best policy for your client and their project when you download our free resource, Navigating Builders Risk: Agent Guide to Finding the Right Policy.

This is intended as a general description of certain types of insurance and services available to qualified customers. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.