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If you find gaps in your coverage, you can fix them in two ways: additional interest and additional insured endorsement. Although the two concepts sound similar, they differ in terms of how and when these provisions should be applied, as well as the advantages they provide. Understanding the difference between additional interest and additional insured will allow you to determine which (if any) you should include in your commercial policy.

Additional Interest

An additional interest is a third party who takes advantage of being included in an insurance policy but does not require coverage. Typically, these third parties have a financial stake in what is insured. Because they have money invested in the policy, they have a vested interest in ensuring that it is covered. Being included as an additional interest ensures that they are informed of any policy changes, such as cancellations and renewals.

The most typical additional interest is individuals, banks, or lienholders who made a commercial loan. These creditors want to know if the thing they lent money for is no longer insured. This could suggest that the borrower is in financial hardship and may be unable to make business loan installments. As an added benefit to an insurance policy, they would be notified if coverage lapsed.

For example, if you took out a loan to buy new machinery, the bank will want to know if you have commercial property insurance to cover damage and theft in the case of a fire, vandalism, and so on. Alternatively, if you are financing a business-owned truck, the creditor would most likely wish to be named as an additional interest on your commercial auto insurance policy that is taken from a reliable insurance broker in UAE to ensure that the truck has adequate insurance coverage. 

Additional Insured

An additional insured is an endorsement that extends insurance coverage to a third party. This is most typically due to a business relationship, such as a contractor/subcontractor or client/vendor, which creates liability exposures for the third party.

The named insured adds the additional insured to the policy to offer more protection in the event of a disaster or occurrence. Commercial insurance that is purchased from the most reliable insurance broker in UAE, is typically added to general liability policies, but it can also be added to commercial auto and property policies.

Both parties in a business agreement can desire further insured status; it simply requires to be worked out between the two. For example, if one of your subcontractors causes an accident that results in you being sued, if you're an additional insured on their policy, you can file a claim to cover the damages and legal fees instead of relying on your own insurance.

Alternatively, if you run a cleaning business and work in a commercial structure, you can request to be added as an additional insured to the property owner's policy. If an accident happens and your company is sued for negligence, the landlord's insurance coverage will cover your legal fees and expenses.

What Type of Additional Insured Endorsements Are There?

There are two types of additional insured endorsements (sometimes called riders):

• Standard additional insured endorsement

• Blanket additional insured

Major Differences Between Additional Interest and Additional Insured

In both circumstances, individuals involved have a financial interest in what is being insured, either directly as owners or leasing firms or indirectly as a third party who could be sued in the event of an accident or loss. The primary difference between additional interest and additional insured endorsements is how the insurance firm or insurance broker in UAE views those specified.

In the event of an additional interest, they are not deemed insured and receive no direct financial advantage. As a result, individuals cannot file claims or get payouts. As a lienholder, mortgage lender, or other interested party, they have a vested interest in the contents of the renter's insurance policy, auto insurance policy, or something similar.

They are unable to amend the insurance coverage because they are not mentioned as the insured. They merely get notifications when those changes happen. Those identified as additional insureds, on the other hand, are provided with liability protection on the policies to which they are added in the form of third-party lawsuit defense coverage.

It's always a good idea to consult your insurance broker in UAE or review your policy's declarations page to determine what's covered. Additional insureds can get a certificate of insurance (COI) from the policyholder to ensure their status, as they should be listed on the COI.

Loss Payee and its Difference from an Additional Insured

A loss payee is a distinct sort of endorsement from an additional interest or additional insured. A loss payee is added as a rider to a commercial property insurance policy. They are awarded first rights to insurance claim payments following a property loss because they have an insurable interest in the property and thus get priority. Still, loss payees are only eligible for property damage coverage.

However, additional insured is only covered for liability. If coverage is required in both categories, the third party should be named as both a loss payee and additional insured. While adding additional interest has no effect on the insurance premium, having an additional insured does. Because adding an additional insured enhances coverage, premiums typically climb slightly.

When Should I Use Additional Interest or Additional Insured

The easy way to decide whether to include an additional interest or additional insured endorsement is to consider if the third party requires insurance coverage and direct financial benefits or if information regarding coverage is sufficient. If they only require information, adding them as an additional interest should be enough. However, if the third party is searching for payouts and claims, you must include them as an additional insured.

Add Additional Insured or Additional Interest to Your Policy

The procedure of adding an additional interest or insured to your insurance ranges considerably from one another. 

• Additional Interest

Adding more interest to your policy is simple. Often, all you need to do is contact your insurance broker in UAE and provide them with the third party's information. Probably, your premium will remain unchanged.

• Additional Insured 

Adding an additional insured to your policy requires more thought than an additional interest. The first step is to speak with your insurance broker in UAE. They will assist you in reviewing your current policy, determining whether an additional insured rider can be added (and is reasonable), evaluating the level of coverage sought, and discussing any changes to your insurance premium and any limitations that may exist.

Then, you must fill out and submit an additional insured endorsement form. Once the form is completed, your additional insured endorsements will be added to your policy. You can then locate your additional insured on your policy's certificate of insurance.