A CGL policy or commercial general liability policy is one of the most essential types of commercial insurance policies out there. It has a broad scope of coverage involving third-party liabilities—thereby making this insurance policy beneficial for nearly all types of businesses.
If you have an active CGL policy or are thinking of getting one for your business, you need a firm understanding of the policy’s “insured” to maximize the benefits.
So whether you run a construction company, engage in trades, or operate other types of businesses (e.g. restaurants, stores, etc.), this article will show you how to determine the “insured” in your CGL policy and other fundamentals.
Let’s get started!
What is a CGL Policy?
A CGL policy is truly a must in an increasingly litigious society because this type of insurance provides protection for a wide range of third-party lawsuits. It protects your business in the event that you are sued for third-party bodily injury, advertising injury, and property damage.
Who Needs a CGL Policy?
A CGL policy is advisable for any business that can potentially cause physical harm to third-party individuals such as customers, clients, the general public, and so on—whether physical harm is connected to business operations or from sold products.
It is also a must for businesses that work on or in proximity to third-party properties and have a risk of causing property damage. Lastly, businesses that conduct advertising/marketing efforts can also benefit from a CGL policy because this insurance covers against advertising injuries like libel, defamation, slander, and so on.
What is an “Insured” in a CGL Policy?
One of the vital parts of an insurance policy is the “insured.” This pertains to individuals, organizations, or entities that are covered by the insurance policy. When reading your commercial insurance documents, you’ll find three main types of insureds:
- Named insured
- Additional insured
- Additional named insured
Named Insured
The “named insured” is typically found in the first section of your CGL policy or what’s known as the “Declaration Page.” This page states who the named insureds are along with other details such as the covered risks, the limits of the policy, and the period of the policy.
Typically, the named insured in a CGL policy is also the policyholder. As such, the named insured/s have the broadest scope of protection and compensation in a CGL policy. The named insureds of an insurance plan are also the ones who do the following:
- Choose the insurance policy
- Settle the insurance policy’s premium
- Update the insurance as needed
- Get cancellation notices due to lack of payment, misrepresentation, and so on
Usually, the named insured/s in a CGL policy are the following entities:
- The individual
- The business (legal name), which could be a sole proprietorship, partnership, limited liability company, a trust, or another type of organization
Additional Insured
The additional insured in a CGL policy is usually included by endorsem*nt, as requested by the named insured or the policyholder. The scope of coverage that additional insureds get is limited. The additional insureds are only covered within the policy for claims arising in connection with the named insured/s.
Additional insureds are also typically not responsible for paying premiums, nor are they notified when there are changes or cancellations to the policy.
Examples of typical additional insureds in a CGL policy are the following:
- Subcontractors
- Service providers
- Associated companies
Additional Named Insured
An additional named insured is a person, business, or entity that has been added to the policy by the policyholder. However, they share a broader scope of protection than additional insureds. In most cases, additional named insureds have the same rights as named insureds in the CGL policy—except that they may not be responsible for the policy’s premiums.
Additional named insureds, however, will be notified when there are changes or cancellations related to the CGL policy.
Usual examples of additional named insureds include the following:
- Affiliates
- Co-owners
Named Insured vs. Additional Insured vs. Additional Named Insured
In the past sections, we talked about the three types of insureds in an insurance policy. Refer to the table below that summarizes and differentiates the three kinds.
| Type of Insured: | Named Insured | Additional Insured | Additional Named Insured |
|---|---|---|---|
| Coverage: | Full | Only claims connected with named insured | Typically the same as named insured |
| Is usually the policyholder: | Yes | X | X |
| Pays the premium: | Yes | X | X |
| Updates the insurance policy: | Yes | X | X |
| Gets notified about insurance changes/cancellations: | Yes | X | Yes |
How To Know Who/Which Should Be a Named Insured, Additional Insured, and Additional Named Insured
If you’re a business, establishment, or individual looking to get a CGL policy, you might wonder how to determine who or which should be named insured/s, additional insured/s, or additional named insured/s in your policy.
Because there are a few overlaps amongst these three kinds of insureds, it can get confusing. Furthermore, the examples that we stated in the previous sections are just the usual configurations—but these can still differ from policy to policy.
As an example, subsidiaries can be named insureds. However, in some CGL policies, they can be included as additional named insureds instead.
The good news, however, is that determining the above details in your CGL policy is not a task you need to face alone. Experienced insurance brokers can sit down with you, assess your business, and determine how to set up a CGL policy that best fits your needs.
A Truly Customized and Hassle-Free CGL Policy
In this article, we covered the different kinds of “insureds” that can be included in your CGL policy. We also talked about how different policies can reflect different configurations on who the named insured/s, additional insured/s, and so on usually are. But this is only one level of customization you can get for your CGL policy. We, at Contractors Insurance, can offer more.
Contractors Insurance is an award-winning, Ontario-based brokerage firm that specializes in providing fully customized insurance policies. We serve various contractors, tradespeople, and professionals across Ontario. On top of customizing insurance plans for your needs, we also offer dedicated assistance every step of the way—from negotiating premiums to following up on claims.
Experience the most hassle-free and fully-customized insurance experience yet. Get started today by getting a free quote or reaching out to our team!
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