As a business owner, you have many insurance concerns. First, there’s the building and its contents. Then, you need to insure your products, services, vehicles, and income. And then, there are the people who work for you. Sure, your employees are most likely covered under your current business owner’s policy, but what about those vendors who only work with you temporarily or on certain projects? If you often partner with third parties to complete business-related tasks, you may need to have a conversation about "additional insureds" with your vendors and your independent agent.
Additional insureds are individuals who are covered under an endorsement added to a pre-existing business owner’s policy at the request of the policyholder. While many contracted professionals have their own insurance, additional insureds coverage protects third parties from what could become complex liability situations. So, whose responsibility is it to add the endorsement when partnering with another business?
The answer depends on the situation and is best determined by your independent agent professional. However, here are a couple examples to get you thinking about how additional insured coverage may apply to your business:
• Imagine you’re a store-owner, but you work with an outside vendor who supplies and delivers your merchandise. In this scenario, you will want to be added to the vendor’s policy as an additional insured. Furthermore, a vendor’s agreement should exist between you and your vendor. Both actions will help to protect you should a liability case ever be brought against your establishment due to the selling of their products.
• Suppose you’re a contractor working on the remodel of a house. You hire a subcontractor to put in a fireplace. But before work begins, you ask to be added as an additional insured on his or her business owner’s policy. This ensures that you are protected in the event that the subcontractor’s negligence results in a liability lawsuit by the homeowner.
As a business owner, you’re probably accustomed to being independent. However, in today’s connected society, it’s inevitable that your business will ultimately need the assistance or input of another organization. That said, it’s important to ensure that all parties are insured, and that any service that is being offered or conducted on behalf of your business is protected under your insurance policies or additional endorsements. Talk to your independent agent about the third parties you work with and whether your company could benefit from additional insureds. And for more business tips and information, log-on to www.preferredmutual.com.