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Either in policy language or by endorsement of your policy, you can extend your business’ coverage to third parties that you have a contractual relationship with by adding them as an additional insured.  This is necessary where both parties may either share the responsibility/fault for a claim or where it may appear that they both share the responsibility/fault for the claim.

For instance, a party goes to a shopping mall and slips in the food court.  The terms of the lease may say that the tenant is responsible for the food court.  So, it would make sense for the landlord to insist that the tenant add them as an additional insured on the tenant’s GL policy. Also, since the injured party doesn’t know the terms of the lease, they may sue both parties.  Additional insured status helps the landlord and tenant to have a cohesive approach to the defense of the claim.

An additional insured does not have more rights than the Named Insured.  This means that if the policy would not provide coverage on an issue for a Named Insured, then it also will not provide coverage for an additional insured.  So, in the previous example, the landlord would also have an indemnity clause that would require the tenant to provide financial support even in the event the insurance policy did not respond.