Additional Interest Vs. Additional Insured

In insurance, additional interest and additional insured are among the more commonly misunderstood terms. Most people often use them interchangeably, although they refer to entirely different parties.

It’s important that you know the difference between an additional interest and an additional insured to avoid adding the wrong one to your insurance policy.

So, we looked at what each term means to help you differentiate between them and put it here in this post.

Read along to find out their differences.

What Is An Additional Interest?

An additional interest is a third party (individual or entity) who has a vested “interest” in the property, item, or service being insured without actual ownership of it. 

An additional interest is sometimes referred to as a party of interest or an interested party. This is usually an entity like a bank or a lender who wants to be kept up to date about the property’s insurance state and how it is being protected. This means the third-party benefits from knowing that there’s an insurance policy in place but does not need the coverage.

Typically, additional interests in insurance policies are notified when there are changes to the policy. For example, the party must be informed on changes such as policy cancellations, renewals, lapses in coverage, or failure to renew a policy.

Note that adding additional interest to your insurance policy does not increase your premium rates. 

What Is An Additional Insured?

An additional insured in insurance is used to refer to a third party (individual or entity) that is added to a particular insurance policy through an endorsement. This means an additional insured party holds partial ownership of (or has an interest in) what’s being insured. 

Anyone with partial ownership of (or interest in) the policy must be listed on your policy. Usually, this is done through an endorsement. 

You will find any additional insured parties listed on your policy’s declarations page. 

When your policy names a party as an additional insured, the party is afforded insurance protection under your policy and has the right to make claims on the policy. 

Unlike in additional interest, adding an additional insured to your policy often results in a small increase in your premium rates. Insurers deem additional insured as additional risks because of their ownership of the policy and right to make a claim.

Note: You will find additional interest and additional insured in different types of insurance such as: 

  • Car insurance
  • Homeowners insurance
  • Renters insurance

In all types of insurance, You need to have a clear picture of the type of addition you should make for your protection and the third party you’re adding to your policy. 

Additional Interest Vs. Additional Insured In Car Insurance

There’s often confusion around the definitions of the listed driver, named driver, additional interest, and additional insured in car insurance. To whom these terms apply – and what they particularly protect – may vary substantially.

Here’s the summary difference between these terms:

A named driver only covers drivers who are explicitly listed as named drivers on the policy. In other words, if the policy does not cover any other driver who is not listed on the cover. In this situation, permissive use is not honoured, and this discourages you from loaning out your car to anyone who is not specifically named in the policy. 

On the other hand, a listed driver is anyone listed on the policy as an occasional user of the car, such as more than once a month. A listed driver can include anyone who lives with you and is within the age of driving. 

An additional insured in car insurance is anyone with a stake in the car’s ownership. Some of the circumstances that can lead to listing an additional insured on a car policy include:

  • A leased vehicle: because you don’t own a leased car, the leasing company should be listed as an additional insured. This way, the company will receive a payout in the event of the car’s total loss. 
  • Cosigner: if you take a car loan, a cosigner to the loan is entitled to be added as an additional insured to recoup losses in the event that the car is involved in a total loss.

You may have an additional interest added to your policy if your car is financed. Usually, additional interest is an entity that wants to ensure that the car has continuous coverage to be sure that they’re covered in the event of total loss. They also want to assure you have coverage so that you still receive payment for the car if an accident happens.

In most cases, insurers can require you to maintain certain coverages, including collision and comprehensive. 

The additional interest will be notified if you lower or drop your coverage, which can sometimes lead to the required acquisition of forced insurance. This can subsequently add the payment you make to the financier. 

Additional Interest Vs. Additional Insured In Homeowners Insurance

If a home, or a property, is owned by multiple people, each of them should be listed as an additional insured in the homeowners’ insurance policy. 

Shared homes, cabins, penthouses, or vacation properties bequeathed to multiple parties are some common examples of properties with multiple owners. 

Typically, only parties with ownership rights of the properties are listed as additional insured to ensure they’re covered by the policy and can make claims in the event of a mishap. 

However, a mortgage lender is often listed as an additional interest because of the vested interest that the lender has on the home loan. The lender may request inclusion into the homeowners’ insurance policy, but only as an additional interest.

Additional Interest Vs. Additional Insured  In Renters Insurance

Some landlords may often require you to add them to your renter’s insurance policy as additional interest. This allows the landlord to verify that you are carrying renters insurance coverage as required in your lease. It’s a simple way for a property owner or landlord to ensure that their rental property is protected.

This only applies if your lease requires you to carry a renters insurance policy.

As an additional interest, the landlord also stays informed of any renters policy modifications or non-renewals on the lease. 

Any landlord listed as an additional interest does not benefit from the policy’s coverage. The landlord cannot file any insurance claim unless the claim comes against your liability coverage for damages or injuries that you caused.


Some landlords may ask to be listed as additional insured, but this is a bad idea. Listing landlords as additional insured essentially extends your coverage to them, which often leads to confusion in the event of the need to file a claim. 

It’s better when a landlord is listed as additional interest and not additional insured.

Final Thoughts 

Knowing the difference between additional interest and additional insured will ultimately save you some confusion. 

For instance, you may save yourself from some legal implications. Sometimes, listing someone erroneously as an additional insured can affect your claims’ eligibility. 

Depending on your type and nature of insurance policy, you need to know who to include as additional interest and who to list as additional insured.