What is an additional insured in an insurance policy?

An additional insured in an insurance policy refers to a person or entity that is not the primary insured but is granted coverage under the policy through an endorsement. This status extends the policy's protections to the additional insured, providing them with the same level of coverage as the policyholder for certain liabilities.

This arrangement is commonly used in commercial insurance policies, especially in situations like construction contracts where subcontractors or other parties need to be covered for liability claims that may arise from their work. The endorsement adds these individuals or organizations to the policy, ensuring that they have direct access to the policy's benefits. This is a crucial aspect of risk management, as it helps to protect all parties involved in a business transaction or contractual agreement from potential lawsuits or financial losses.

The other options do not accurately describe the role or coverage rights of an additional insured. A person with no coverage rights implies a lack of protection, and someone entitled to diminished coverage suggests a reduced level of protection, which does not align with the purpose of making someone an additional insured. Furthermore, defining an additional insured as any person not related to the policyholder fails to capture the specific legal implications and coverage extensions that an additional insured designation entails.