The term “named insured” refers to a specific person or entity that is listed on an insurance policy.
Being named as an insured on a policy provides that party with certain rights and responsibilities relating to the policy.
Understanding what it means to be a named insured is important for anyone purchasing insurance or making a claim.
Understanding the Concept of Named Insured
A named insured is a person or organization specifically listed as an insured party on an insurance policy. The named insured is the primary policyholder and legal owner of the insurance contract.
Definition of named insured
The named insured is the individual or entity that applied for and purchased the policy. Their name will appear on the policy documents and declarations page. The named insured is responsible for paying premiums and has the authority to make changes to the policy. Being named provides them with the insurance coverage and benefits outlined in the policy.
Examples of named insureds
Common examples of named insureds include:
- Homeowners – For a homeowners insurance policy, the named insureds are the individuals who own the home. Usually, spouses are both listed.
- Vehicle Owners – For auto insurance, the named insured is the person who owns the insured vehicle. Other drivers may be listed as additional insureds.
- Businesses – On commercial policies, the named insured is the company or organization purchasing coverage.
Differences between named insured and insured
The named insured should not be confused with an additional insured or insured. An insured is anyone covered by the policy. A named insured is the main policyholder. Additional insureds are other parties that may be covered, but they are not the primary policyholder and do not have the same rights and responsibilities.
Obligations of named insured to the insurer
The named insured has certain obligations to the insurance company under the policy terms. These duties include:
- Paying premiums – The named insured is responsible for making premium payments to maintain coverage.
- Providing updated information – The named insured must notify the insurer of any changes that may affect coverage.
- Cooperating in the event of a claim – The named insured must cooperate with the insurer’s investigation of a claim.
- Complying with policy terms – The named insured must abide by all conditions in the policy to receive benefits.
The Importance of Being a Named Insured
Being a named insured on an insurance policy comes with certain advantages and responsibilities. Understanding these is key for claimants and policyholders.
Benefits of being a named insured
The key benefits of named insured status include:
- Right, to make policy changes – Only a named insured can make changes to the policy, such as adding drivers.
- Ability to cancel – The named insured has the right to cancel a policy at any time.
- Priority for payments – Named insureds have first rights to any payment or benefits from the insurer.
- Control over claims – As a named insured, you direct the claims process and settlement negotiations.
Rights and responsibilities
In addition to benefits, named insureds also have important rights and responsibilities:
- Must pay premiums and fulfill all policy duties.
- Has an insurable interest in the covered property or assets.
- Can assign rights or benefits to third parties.
- Will receive any leftover funds if the policy is canceled.
- Must comply with any duties after loss, such as filing claims properly.
Named Insured vs Additional Insured
It’s also important to understand the difference between a named insured and an additional insured.
Definition of additional insured
An additional insured is a party other than the named insured that is granted coverage under a policy. Common examples include a spouse on an auto policy or a landlord on a tenant’s policy.
Differences between named insured and additional insured
While named insureds and additional insureds may have similar coverage, there are key differences:
- Named insureds are the principal policyholders while additional insureds are secondary.
- Only named insureds can make policy changes or cancellations.
- Named insureds’ coverage is primary while coverage for additional insureds may be excess or contingent.
- Claims and legal actions must typically be initiated through the named insured.
- The rights of additional insureds are restricted compared to named insureds.
In summary, being a named insured grants important benefits, obligations, and authority over an insurance policy. Named insured status should not be confused with additional insureds who have more limited rights. Understanding these distinctions can help you fully leverage your rights as a policyholder.