Auto Insurance Terms: What Does Additional Insured Mean?

Understanding insurance terms can help you get the best out of your car insurance. Most terminologies used in insurance are confusing and prevent car owners from understanding their policies. This may limit those who buy car insurance from taking full advantage of its coverage.

Important auto insurance terms you should know 

To help you understand your auto insurance, Access Auto Insurance has explained the following 10 must-know insurance terms. 

  • Policyholder: This term refers to the person who buys an auto insurance policy and pays the premium. A policyholder may own and pay for insurance but may not possess the insured car. 
  • At-fault accident: This refers to a car crash you cause, wholly or partially. Your car insurance usually pays up to the expected limit for the victims’ injury and property bills. It may also pay for your legal expenses if you’re sued. 
  • Auto insurance claim: This refers to a request made by a policyholder to the car insurance company to cover the vehicle repair costs, injury treatment, and other associated costs. 
  • Collision coverage: This is a type of coverage that covers a one-car accident, such as hitting a tree. It’s usually required when purchasing a vehicle on loan. 
  • Comprehensive coverageComprehensive coverage pays for car repairs after an animal collision and specific noncollision issues such as fire, car theft, and falling objects. 
  • Car insurance quote: This is an estimated cost of how much an insurer will charge for your insurance. 
  • Deductible: A deductible is a predetermined amount that insurance subtracts from an insurance settlement. For instance, if your total damage cost is $5,000 and you have a $500 deductible, you will receive a claim check for $4500. 
  • Personal injury protection (PIP): This type of auto insurance pays for the cost of treating your injuries regardless of who was at fault for the accident. It also covers costs MedPay wouldn’t cover, such as physical therapy and lost income.
  • Premium: This is the cost your insurer expects you to pay, whether yearly, every month, or after every six months. 
  • SR-22 insurance form: This is an official document that you may be required to prove that you have sufficient auto insurance. Insurance companies fill out this form to help you reinstate or keep your driving privileges after a traffic offense. 

What is ‘additional insured’?

Investopedia defines additional insured as a status associated with general liability insurance policies where a group or individual not named in the policy is included in the coverage. It protects the insured people or individuals under the policyholder’s insurance, and they can even file a claim under it when sued. It usually involves co-vehicle owners, a leaseholder, or someone driving vehicles owned by another person. 

What happens to your insurance when you add someone to your policy? 

A father and son searching for auto insurance for an old Toyota car in Toronto, Ontario, Canada
A father and son looking for auto insurance for an old Toyota | Todd Korol/Toronto Star via Getty Images

The groups or individuals added to a policy are additional insured and added through an amendment known as an endorsement. According to The Balance, once a policyholder includes someone through additional insured, everyone listed through the coverage can seek compensation from the insurer. Additional insured individuals or groups are also notified of vehicle and insurance coverage changes.

Please note that insurance companies consider the risk associated with additional insurance minimal. Therefore, the cost of the additional insured is usually low compared to the cost of your premium. 

RELATED: Will Your Insurance Cover an Accident if Someone Else Is Driving the Car?