Insurance jargon can be confusing, like the difference between:
- Insured;
- Named Insured; and
- Interested party
Each has a special meaning, so it’s important to understand the differences.
Who is ‘The Insured’?
- Usually the person(s) or company organising and paying for the insurance policy.
- They are also the only persons that can make changes, cancel the policy or receive claim payments.
- they will receive policy documents, general notices, renewal and cancellation notices.
- They can notify and negotiate claims.
Who is the ‘Named Insured’?
Like the Insured above, this will include the person arranging and paying for the policy.
There may also be Additional Named Insured(s) shown in the policy, for example, directors, managers and employees can be covered under a club or business insurance policy.
These people, companies or even government departments are included in the insurance cover and:
- will have the same cover, exclusion and conditions that apply to the Insured.
- are subject to the same duty to disclose claims or circumstances as the person/ company arranging and paying for the insurance cover.
- Government or semi-government or Landlords can often fall into this category, as a requirement of a contract, but this can vary from policy to policy, so you’ll have to check.
- can make a claim and negotiate a settlement;
An example of an additional named insured being stated on a Contract Works policy would be, ‘Additional Named Insured: subcontractors and consultants, while working on site for the Insured.’
What is an ‘Interested Party’?
An interested party is a person or business with some financial interest in the item or risk being insured. For example a bank related to a building mortgage or Landlord. An ‘Interested Party’:
- is not a Named Insured or Additional Named Insured, so has limited rights.
- will not receive renewal or general notices;
- may be able to notify a claim, however cannot negotiate, dispute the claim or or receive claim payments.
Key takeaways
Many clients are required to add others to an insurance policy. It’s important to check your policy’s specific terms and conditions to ensure you have noted the other people or companies correctly.