What are "additional insureds" in liability policies?

In liability policies, "additional insureds" refer to parties that are granted coverage under specific circumstances, typically extending the policyholder's liability coverage to include these additional entities. This arrangement often occurs in scenarios where a policyholder has contractual obligations to provide indemnity or additional protection to another party, such as when a contractor adds a property owner as an additional insured on their liability policy.

The significance of including additional insureds lies in enhancing the coverage available to those individuals or entities, ensuring they are protected against claims that might arise from the activities of the primary insured. This is crucial in business relationships, such as those found in construction or service contracts, where multiple parties are exposed to liability risks.

Choices that define "additional insureds" in different contexts, such as those who are excluded from coverage, involved in issuing waivers, or responsible for deductibles, do not capture the essence of the term. Additional insureds receive specific coverage enhancements rather than being excluded or limited in the ways these other descriptions suggest.