Learn About an Additional Insured on an Auto Policy

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You might come across the term "additional insured" when you're reviewing your personal auto policy's insurance paperwork. Or maybe someone has requested to be added to your policy. It's important to understand the term and its implications before you commit.

An additional insured is someone who has partial ownership of an auto or is liable for an auto that's insured by another party. A driver on a policy is not automatically an additional insured.

Key Takeaways

  • An additional insured is an auto's partial owner or who is liable for an auto insured by someone else.
  • A driver who is listed on the policy is not the same as an additional insured.
  • Additional insured parties are often co-owners on the title or leaseholders, or they're driving vehicles that are owned by someone else.
  • A listed driver isn't eligible for the compensation that's granted to an additional insured.


Additional Insured vs. Listed Driver

An additional insured is not the same as a listed driver. Don't assume that you'll be compensated for a loss because you are listed on someone's policy as a driver. Only named insureds, loss payees, and additional insureds are listed on insurance claim checks for total losses.

The additional insured must have ownership of one or more of the vehicles on the policy. They may or may not drive the auto, depending on whether they're listed as a driver or have insurance elsewhere.

The listed driver could have no ownership of the auto. They could be its primary operator or even just occasionally drive it.

Who Is Added As an Additional Insured?

Naming an additional insured can depend on the ownership of the vehicle.

Co-Titled Vehicles

These often have an additional insured if the two people on the title aren't married or listed as named insureds together. Your grandparent would be listed as an additional insured if they cosigned on a car loan for you and doesn't live in your household. They don't have to be listed as a driver. They live out of the household and probably have their own car insurance policy.

As part-owner of the car and an additional insured, they're entitled to compensation after a total loss if both of you owe less than the actual cash value of the vehicle.

Leased Vehicles

Leased autos should always have the lease company listed as both the loss payee and additional insured. This is sometimes referred to as a combination. The lease company acts as both the lender and the owner of the vehicle in this case. It would receive the claim check in the case of a total loss. Gap insurance is often included on leases, so you won't have to worry about an out-of-pocket expense.

The Owner Isn't the Named Insured

Not many insurance companies allow people to insure vehicles they don't own. Preferred carriers are often very strict about this rule. They only allow insurance to be held in the name of the person on the title. But some standard and non-standard insurance companies don't have any restrictions on who insures a vehicle. The claim check will go to the insured unless you're listed as an additional insured if you allow someone to insure your auto and physical damage protection is purchased.

The Purpose of Being Listed As an Additional Insured

The additional insured is notified when a change is made to the vehicle. They're notified if coverage is reduced to storage insurance. The same goes if the vehicle is removed from the policy or coverage is added or reduced in any way. It keeps the additional insured in the loop when it comes to insuring the auto.

Additional insureds are included in claim payouts. The additional insured's name is on total loss claim checks as an owner of the insured property.

When Should an Additional Insured Be Removed?

An additional insured is only removed when the name is removed from the title. They should be removed right away because the additional insured has no interest in the vehicle after its sale. Having an additional insured listed on the policy can delay the transfer of an auto's title if it's not first removed.

The owner of the vehicle is entitled to compensation if the coverage is correct and the owner owes less than the actual cash value of the vehicle. It's key to know how having an additional insured works, whether you're the additional insured or you need to add someone to your policy. Make sure the additional insured is listed properly on your policy. Check your declaration page or ask your agent.

Article Sources

  1. Insurers of Tennessee. "Who Should You Be Listing As a Driver?"

  2. American Bar Association. "Definitions and Comparisons of Commonly Used Titles." Pages 1-2.