What is an additional insured endorsement and when is it needed?

An additional insured endorsement modifies a liability insurance policy to extend coverage to a person or entity beyond the named insured. In apartment insurance, additional insured endorsements are commonly requested by mortgage lenders, property management companies, investors or partners, ground lessors, and contractors performing work on the property. The ISO CGL policy offers several standard additional insured endorsement forms, including CG 20 11 (managers or lessors of premises) and CG 20 10 (ongoing operations), which are commonly used in apartment insurance.

When a party is added as an additional insured, they receive liability coverage under your policy for claims arising from your operations or ownership of the property. For example, if a mortgage lender is added as an additional insured on your general liability policy, the lender would be covered if they are named in a lawsuit stemming from an injury at the property.

Most commercial general liability policies allow additional insureds to be added by endorsement, often at no additional premium for standard requests. However, the endorsement only provides coverage to the additional insured for liability arising from the named insured's operations. It does not cover the additional insured's own negligence or unrelated activities.

Mortgage lenders also commonly require a loss payee or mortgagee endorsement on the property insurance policy. This is different from an additional insured endorsement. The loss payee endorsement ensures that the lender is notified of policy changes and receives insurance proceeds in the event of a property damage claim, protecting their financial interest in the building. Fannie Mae's Multifamily Selling and Servicing Guide (Part III, Chapter 6) and Freddie Mac's Multifamily Seller/Servicer Guide (Chapter 58) both specify the mortgagee clause language and additional insured requirements that must appear on policies covering financed properties.