Do you live in an apartment complex that requires you to have a renters insurance policy? More and more property owners and landlords are requiring renters to have a renters insurance policy set up and in-force before move-in. Perhaps you purchased a renters insurance policy, submitted your insurance documents to the office thinking you met the requirement, but you are then informed that your policy is being declined because there is an error with the additional interest, and you cannot move in until it’s corrected. Well, what is an additional interest, and why do you need one on your policy anyway? Show What is an additional interest?On your renters insurance policy, an additional interest simply means a party that will be notified of any changes to your policy. The types of changes the additional interest will be notified of typically include cancellations, lapses in coverage, or renewals. Simply put, an additional interest will be notified only about changes in the status of your renters insurance policy. Now, where this can sometimes get confusing is that an additional interest sounds very similar to an additional insured. Even though both sets of words start with the same letters, the meanings are very different. An additional insured is someone who can make changes to a policy, whereas an additional interest cannot. Read more about the differences in our article Additional Interest Vs. Additional Insured. This is so confusing, that sometimes even insurance agents, underwriters, companies, and everyday people can confuse the two. An additional interest may also be referred to as an interested party. An interested party is the same thing–someone who has an interest in what happens to the status of the policy, but cannot make any changes and is not extended any coverage by the policy.  What is an additional interest and why do I need one? What changes can an additional interest make to my policy?None. Why do I need to list an additional interest?Since the additional interest will be notified of any policy changes, many landlords or insurance certificate monitoring companies require being listed as the additional interest. They need to be informed of changes to make sure residents are still in compliance with the terms of their lease agreement. For example, let’s say a man named Bob wanted to move into an apartment. One of his lease requirements was that he needed to have a renters insurance policy. Bob didn’t particularly want to buy a renters insurance policy, but he wouldn’t be able to get his keys and move into the apartment until he provided acceptable proof of coverage. So he purchased a policy and then canceled the policy immediately after move- in. If his apartment complex didn’t require an additional interest to be listed on the policy, they would not know he was not in compliance with the terms of his lease, and if Bob caused a loss, he would be a very expensive problem indeed. Long story short, landlords and property owners want to be listed as the additional interest so they know that their renters are helping to protect their investment. I have an additional interest listed on my policy, but my proof of insurance was still declined. Why?One of the most common mistakes we see on people’s insurance certificates is with the additional interest, and many times, it is extremely simple to fix. Some common errors made in the additional interest section of a renters insurance policy include the following:
These are a few of the more common reasons that we see here at Effective Coverage for insurance certificates being declined. Essentially what it all boils down to, is that the additional interest name and address need to align with whatever the requirements are that are specified in your lease. If you need to know how to add your landlord as an additional interest, click to read our guide, or call us anytime. Our insurance experts are here 7 days a week to answer any questions you may have.
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Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. Editor’s Note: Many times, an insured is asked to add someone as an additional interest when they should be an additional insured or vice versa. Our question this week addressing such a situation. Question: We have an insured written on an HO4 renters policy. The landlord and the property management company want to be included as additional insureds in the policy. It is not acceptable to them to be listed as additional interests.
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Joyce Schuett senior personal lines underwriter, explains if you own something, in whole or in part, it's vital that you're listed as an “insured” on the insurance policy. When something is co-owned, one party must add it to their insurance policy and list the other co-owner(s) as Additional Insured(s) because they also have ownership. If that co-owned item causes injuries or damages to others, only those parties listed on the insurance policy are protected if they're sued for those injuries or damages. For example, let's say two brothers co-own a cabin. Brother #1 adds the cabin to his insurance policy, but doesn't list Brother #2 as an Additional Insured. Someone is injured on the property and sues both brothers/owners, however, only Brother #1 is protected because he's the only insured listed on his policy. Brother #2 doesn't have protection and could be personally sued, thereby risking the loss of his home, investments, and other assets. If that's an Additional Insured, what's an Additional Interest? An Additional Interest is a party who may be INTERESTED that an item is insured, but DOESN'T have any ownership in that item and therefore they CANNOT be listed as an Additional Insured. For example, a condominium association would have an INTEREST in all unit owners within the complex having insurance. If a unit owner is responsible for causing damage to the main buildings, the association’s insurance shouldn't have to pay for it. A unit owner would list the condominium association as an Additional Interest on their condo policy. The association would receive a copy of the unit owner's policy, as well as notification if the policy cancels. Being listed as an Additional Interest, however, does NOT provide any coverage to the association because the association doesn't own the unit; they simply have an interest in the unit owner having insurance. The misuse of Additional Insured vs Additional Interest in the insurance industry is sadly much too common. Insureds, agents, and companies often don't understand the differences, don't clarify ownership of items, or don't ask enough questions to confirm that who/what they're adding to an insurance policy will be properly protected. For instance, one insured can't sue another insured on the same policy so incorrectly adding a party as an Additional Insured could make suing a responsible party impossible. This example illustrates. A homeowner hires a contractor for a major renovation project and the contractor asks to be listed as an Additional Insured on the homeowner’s policy. The homeowner contacts the agent who sends a request to the insurance company to add the contractor. No one asks any other questions and the change is processed. The contractor loosely installs a railing on an elevated deck. A friend who's visiting the home leans on the railing, it gives way, and the friend falls and is injured. The homeowner’s insurance carrier covers the injuries under the home liability but then tries to recover appropriate damages from the contractor’s insurance since they were responsible for the loose railing. The contractor, however, can't be sued for damages because of being listed as an Additional Insured on the policy even though the contractor didn't have any ownership in the home and had no right to be an Additional Insured. Instead, the contractor should have been listed as an Additional INTEREST on the policy because the contractor only had an INTEREST in the homeowner carrying insurance. So anytime someone asks that others be added to a policy, ask questions about who has ownership and why a party should be listed. This will ensure accurate insurance coverage. Do you have any tips or information you’d like to share? I’d love to hear them; please share them in the box below. This article is intended for general educational and illustrative purposes only and should not be construed to communicate legal or professional advice. Further, this article is not an offer to sell insurance. Please consult with your licensed insurance agent for specific coverage details and your insurance eligibility. All policies are subject to the terms, conditions, limitations, definitions, and exclusions contained therein. |
What is additional interest in insurance
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