Additional insured and additional interest sound similar, but they each mean something different for your homeowners insurance policy.
Choncé Maddox Rhea Edited by Kelly Larsen Updated September 6, 2024
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When you get homeowners or renters insurance, you’ll have the option to list someone as an additional insured or additional interest. While these two terms often get confused, they’re very different and shouldn’t be used interchangeably.
Here’s what you need to know about additional insured vs. additional interest:
The key difference between someone who’s an additional insured vs. additional interest is whether they also own the property and can be protected by the homeowners insurance policy.
A person or entity that’s listed as additional insured also receives coverage under the policy and has the ability to make claims. If you have a mortgage, your lender could be an additional insured. However, in most cases, an additional insured is someone who lives in the home. Additional insured is only available to owners of the property looking to gain the financial benefits and protection that homeowners insurance can provide.
Additional interest is a person or entity that has a financial interest in your property but isn’t an owner and can’t collect a claim payout. If you’re renting, your landlord or property manager might want to be included as additional interest so they know if you have coverage.
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Compare home insurance from top carriersWith a homeowners insurance policy, you’re able to list someone on the declaration page of your policy as an additional insured if they hold some form of ownership for the property. Homeowners insurance typically covers the policyholder and the people living in the home with you. These residents are all named insured. But if you need to add someone to your policy later, they’re known as an additional insured.
Example: Say you buy a house on your own. A few years later, your significant other moves in with you. You could add your loved one as an additional insured. This differs from buying a house together as a married couple, which would make you both named insured when you get your homeowners insurance.
Sometimes multiple people are owners of a property, such as a rental home, vacation home, or cabin. If a few investors buy a property together, each of them should get coverage under the homeowners insurance policy either as the main policyholder or an additional insured.
Or, let’s say a parent leaves you and your siblings a home. Even if not all siblings reside in the home, they’re all part-owners. In this scenario, each sibling should get coverage that gives them the right to file a property claim and protect their financial investment in the home.
Keep in mind: An additional insured isn’t always an individual. Your mortgage lender or bank, for example, may want to be listed as an additional insured, and may even require it. This allows the mortgage lender to receive a check if you get a settlement after filing a claim for damage with your insurance carrier.
In many cases, you can add more people or entities to your policy with an endorsement, or insurance rider. This modifies your policy to extend coverage to the additional party or parties. Just know that an endorsement could impact your premium amount. In the case of multiple owners of a home or other type of property, it’s important to discuss who should be listed as an additional insured.
Additional interest on a homeowners insurance policy is for non-owners who still have a vested interest in the home or property. Most of the time, you add an additional interest to the declaration page of your insurance policy if that person wants to keep an eye on your coverage. If a storm or fire causes damage to your home, an additional interest wants to know that you have adequate coverage and will be able to file a claim as needed.
Example: If you rent out the home, you might add the rental management company you use as an additional interest.
A person or entity listed as additional interest can’t file a claim or receive coverage for the property. However, they can be notified when you make modifications to your insurance policy, and your insurer will inform them when you renew your policy. If for some reason your policy lapses, the person or company named as an additional interest will receive notification.
Adding an additional interest may be required, or you might simply want to keep someone in the loop on your policy and any changes without allowing them to receive financial benefits and coverage from the policy.
You’ll see the terms additional interest and additional insured in relation to other types of policies, too, such as auto insurance. You may need an additional insured for anyone who has a stake in the ownership of your vehicle, such as the lender for your auto loan.
Let’s say you leased a vehicle and the company or car dealership wants to be listed as an additional insured. If you do this, the company can receive a payout if your car gets totaled during your lease. Adding the company to your policy as an additional insured protects their investment in loaning a vehicle to you despite the risk that an accident or substantial damage could occur.
If you get a car loan with a cosigner, you may want to add them to your auto insurance policy as an additional insured as well. Your cosigner would then be able to file an insurance claim and receive coverage in the event that you’re unable to finish paying for the car after an accident.
On the other hand, an additional interest party for an auto insurance policy might be a company or entity that wants to make sure your insurance coverage is suitable and remains active. If you’re financing a car, your lienholder could be listed as an additional interest. The company may require you to maintain certain levels of auto insurance coverage until you pay off your loan. Being an additional interest can help them monitor that coverage.
Additional interest can apply to renters insurance, too. Some landlords prefer that you list them on your policy as an additional interest. This is a way for landlords to verify that you’re carrying insurance as a renter, especially if your leasing agreement expressly states that you must have renters insurance.
Carefully consider whether you should list a person or company as additional insured or additional interest in your homeowners insurance policy based on whether they have a claim to ownership or just a financial interest in your property.
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About the author Choncé Maddox RheaChoncé is a personal finance freelance writer who enjoys writing about mortgages, student loans, and helping people achieve financial wellness. Her work has been featured on sites like Business Insider, Lending Tree, Fox Business, RateGenius, and more.
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