Policy wordings for business insurance can be highly complex and the technical and legal language can be overwhelming to interpret. However, there is one term in particular - the named insured - that is extremely important for you to understand as a business owner.
Named Insured Explained
The named insured is the individual or entity that is identified by name on an insurance policy's declarations. As the main party covered under the policy, the named insured:
- can update or make changes to coverages
- can cancel the policy
- is responsible for paying the premium
- is responsible for filing the claim in the event of a loss
Why is the Named Insured Important?
Where a business is listed as the named insured, the insurance policy covers the organization's legal liabilities. If the named insured on your policy is incorrect (e.g. you mistakenly list an individual rather than the business), you may wind up with insufficient coverage or claims being denied entirely.
Five Tips to Avoid Making Costly Errors With Your Insurance Policy
1 - VERIFY THE NAMED INSURED
Ensure the named insured shown on the policy correctly reflects the party that requires coverage. Whether it is an individual or a business, the named insured must be accurately and fully stated. For businesses with complex structures, consult your insurance advisor for guidance.
2 - UPDATE THE INSURER
Any changes to the business (e.g. ownership, business structure, etc.) should be reported to your insurer as your coverage may be affected. Neglecting to communicate these changes can cause complications when filing a claim.
3 - CONSIDER ADDITIONAL INSUREDS
In some cases, you may wish to extend coverage to third parties involved in your business operations (e.g. landlords, financial institutions, etc.) by adding them as additional insureds on your policy. Consult your insurance advisor on this process.
4 - REVIEW YOUR POLICY ANNUALLY
Review and update your policy at least annually with your insurance advisor to ensure that it continues to meet the requirements of your business.
5 - SEEK PROFESSIONAL GUIDANCE
Make use of your insurance advisor's expertise to help you navigate the complexities of business insurance. This can save you from costly mistakes and ensure you're adequately covered.
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