An insured is simply a person, business, or other entity that an insurance policy covers. A named insured, however, is unique in that they are specifically mentioned in the policy. Usually, the named insured is the only person or entity covered by every section of the policy.
Sometimes the named insured is the policyholder, or the person who purchased the policy. That’s typically how it works in home insurance. The homeowner purchases home insurance and is the named insured because they have the insurable interest in the property. Many homeowners policies also include the owner’s spouse and family members living in the home as named insureds.
But this isn’t the case with every type of insurance. For example, a life insurance policy can be purchased by one person, making them the policyholder, but insure the life of someone else. The person’s life who is insured is the named insured.
You can find out who is a named insured by reading the policy’s declarations page. Each named insured is typically listed there.
What does a named insured do?
On a homeowners policy, the named insured usually has control of the policy. That means they can:
- Change coverage limits.
- Add endorsements.
- Cancel the policy.
- File insurance claims.
Named insureds also have certain obligations. For example, they’re typically responsible for paying premiums, reporting losses immediately, and assisting their insurance provider when it investigates claims.
Benefits of being a named insured
The main benefit of being a named insured is that you’re covered by every aspect of your homeowners policy. That means you control the policy, and you get the proceeds if you have to file a claim. So if your house and personal items are lost in a fire, you can file a claim with your insurance company. Your insurer then evaluates your claim, determines how much you lost, and covers the cost to rebuild your home and replace your personal property.
Your insurance company may pay you directly to cover your personal property, but it could send the check to the contractors who are fixing your home. If you do receive the claim check, then the check might also list your mortgage lender as a recipient to make sure that the proceeds are, in fact, used to fix the home. Your insurer can do this if your mortgage lender is listed as a loss payee on your coverage.
Named insured vs. additional insured
Your home insurance policy may also list additional insureds. These are individuals or entities who aren’t included in your policy, but that you want to have covered. Common reasons for adding an additional insured to your homeowners policy include:
- You get married.
- Someone owns part of your home but doesn't live there.
- Someone who isn’t a member of your immediate family moves in.
The biggest difference between named insureds and additional insureds is who controls the policy, and that’s the named insured. For comparison, additional insureds are people the named insured adds to their policy, and that status means they have limited rights and responsibilities. For example, additional insureds are not responsible for paying premiums, but they can benefit your insurance company’s duty to defend insureds during a liability claim.
