Additional Issues: Maximizing Coverage for Additional Insureds

This article originally appeared in Anderson Kill's Hospitality Alert (October 2012).

The hospitality industry relies on insurance coverage to protect against a wide range of risks, from simple slip-and-falls to devastating property damage. Every entity is different, and selecting the most appropriate insurance coverage for a particular property or company is crucial. Yet it is increasingly common for members of the hospitality industry to have themselves named as “additional insureds” on another entity’s policy, rather than reviewing, comparing and then selecting a policy for itself. Franchisors frequently have themselves added to their franchisees’ insurance policies. Property owners often delegate the responsibility of purchasing insurance to companies that manage and maintain the property. While this often makes economic sense in the short term — the company delegating responsibility for purchasing insurance saves money on premiums, brokers’ fees and other costs — permitting another company to purchase your insurance is not without risks of its own. Members of the hospitality industry (or any other industry) seeking to have themselves named as an additional insured should not simply sit back and allow the named insured to procure the insurance. By participating in the process, additional insureds can maximize the likelihood that there will be coverage for claims if and when they occur.