Many contracts require one party to name the other as an “additional insured,” but too often without specifying the scope of coverage required. This is problematic because coverage for additional insureds comes varied, and the parties may have different ideas of what coverage the contract requires. By the time the parties realize they have different opinions, it is usually too late; a lawsuit has been filed against one party, who then learns it is not an additional insured under the other’s liability policy. In my practice representing insurers, I am often the one to inform parties of that fact. Like many legal issues, the parties could have avoided turmoil with proper planning and a well-drafted additional insured clause in their contract. This article explains the basics of additional insured coverage and tips to avoid common mistakes and get the coverage you expect.
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