Additionally Insured Status
Contractors should not be obligated to include their client in their insurance policy. This is my personal opinion, which I will support in this blog.
Additionally insured persons or parties enjoy the same benefits as the main holder of the insurance policy. The allowance for having additional insured in a liability policy makes sense if there is a close relationship between the insurance holder and the additional insured. For example, in vehicle insurance it is worthwhile to include your spouse as co-insured.
The benefit to your client
If your client is added to your liability insurance, he enjoys the same benefits as you do. Your client has the right to contact your insurance company directly and place a claim without your interference. Your client will also enjoy the benefits of defence, the costs of which are covered without limit. Your insurance policy may also cover your client for his or her negligence.
“Your client’s argument to include his company as co-insured is that in case he is sued because of your actions, he is covered.”
Negotiating Additionally Insured Status
You are not an insurance company. Your client, especially in case of large contracts, should have his own insurance in place. Furthermore, other contractual provisions will defend your client’s liabilities.
"You should not include your clients as co-insured without obtain a favour in return. The ‘additional insured’ paragraph should be negotiated in all cases."
In case your negotiation leads to inclusion, be prepared for the following:
- Your insurance company might be reluctant. Nevertheless the inclusion should not be a real problem.
- If you have many co-insured companies on your insurance policy, the risk profile may change. This may result in an additional premium.
- Ask your insurance company for a certificate of inclusion, which you can forward to your client.