What Contractors Need to Know About Blanket Additional Insured Endorsements
Sometimes contractors need to provide coverage for the third-parties they work with. This is done with a Blanket Additional Insured Endorsement.
In this post, we are going to talk about what they are and give an example.
What Does it Mean to Be an Additional Insured?
To understand Blanket Additional Insured Endorsements, you have to know what it means to be an additional insured.
If you name an additional insured on your insurance policy, you are providing coverage for a third-party.
If you are an additional insured, you benefit from somebody else’s insurance coverage. This includes the ability to make a claim under the policy.
The most important thing to remember about additional insureds is that it gives coverage to parties not named in the policy.
What is a Blanket Additional Insured?
A Blanket Additional Insured is a type of additional insured endorsement. This type of endorsement covers third-parties that require coverage under a contract.
With this coverage, “the named insured will provide a general description of the type of groups that it wants coverage extended to under the policy,” says Investopedia.
Third-parties do not have to be named in the policy to receive coverage. Because of this, insurance providers often have requirements for coverage to kick in:
- The named insured & third-party must have a contract where the named insured shows coverage for the third-party.
- The contract must be in writing for the insurer to review.
- Any third-party approved for coverage must receive a Certificate of Insurance (COI) from the insurer.
Blanket Additional Insured Example
Imagine there is an electrical accident on a construction site. The contractor and the third-party have a written agreement. The agreement states the contractor will provide coverage to the third-party for the duration of the project.
The third-party doing the electrical work makes a claim under the contractor’s insurance policy.
In short, two things must be in place for the third-party to receive coverage:
- The contractor must have a general description of third-party coverage recipients in the insurance policy.
- The third-party and the contractor must have a contract in place requiring coverage.
Since these two cases are met, the third-party receives coverage.
How to Keep Track of Policies
Keeping track of who has coverage and who has coverage under your policy is a huge task.
Contractors who find themselves in this situation need to make sure they have an up-to-date system for managing COIs.
If you want to learn more, sign-up for a free product demo with SmartCompliance and keep track of insurance certificates in one cloud-based platform.