The Separation of Insureds is a standard policy condition of the commercial general liability policy. Also known as the severability of interests, the condition serves several purposes.

What are additional insured provisions?

Additional insured endorsements are insurance provisions extending liability protection from the policyholder to other parties who may benefit.

What is the difference between an insured and an additional insured?

A named insured is entitled to 100% of the benefits and coverage provided by the policy. An additional insured is someone who is not the owner of the policy but who, under certain circumstances, may be entitled to some of the benefits and a certain amount of coverage under the policy.

What is separation of insureds provision?

Most Commercial General Liability policies include a coverage enhancement known as a “separation of insureds” or “severability of interests” clause. This clause states that the policy’s coverage is to apply “separately” to each insured against whom a claim is made.

What means severable?

Severability, also known by the Latin term “salvatorius,” is a provision in a piece of legislation or a contract that allows the remainder of the legislation’s or contract’s terms to remain effective, even if one or more of its other terms or provisions are found to be unenforceable or illegal.

Does it cost more to add an additional insured?

The cost of adding an additional insured is typically low, compared to the costs of the premium. Insurance company underwriting departments often consider the additional risk associated with additional insureds as marginal.

Who should be listed as an additional insured?

Additional insured typically applies where the primary insured must provide coverage to additional parties for new risks that arise out of their connection to the named insured’s conduct or operations. These new individuals or groups are added to the policy through an amendment called an endorsement.

What does severability of interests mean in liability insurance?

Most liability insurance policies contain a “severability of interests” condition, which stipulates that the policy’s coverage is to apply “separately” to each insured against whom a claim is made. Severability of interests guarantees that the policy will respond to a suit brought against one insured by another insured.

How does severability apply to separation of insureds?

It states that the policy applies separately to each insured that is the subject of a claim or suit. This provision ensures that if Insured A sues Insured B, the policy will apply to Insured B as if Insured A did not exist. That is, an exclusion that applies to Insured A won’t automatically apply to Insured B as well.

Are there any problems with being an additional insured?

Another problem with additional insured status, particularly for the named insured’s insurer, involves the possibility of conflicts of interest in defending claims. When a lawsuit is brought against both a named insured and an additional insured, often the best defense for one

Are there any exceptions to the separation of insureds clause?

The Separation of Insureds clause contains two important exceptions. First, it does not apply to the limits of insurance. This means that the limits don’t apply separately to each insured. For instance, suppose that Bob and Bill are insureds under the same liability policy.