There are a variety of reasons why one entity might be an additional insured on another entity’s policy. It could be that the two entities are related in ownership or regularly do business with one another. Remember, the additional insured provisions general do not grant carte blanche coverage to the additional insured. Rather, the coverage will be limited in some way to the additional insured’s work with/for the named insured entity.
Contractors frequently require their subcontractors to procure additional insured coverage “upstream” (see Lessons 71, 78-80). Way back when, that meant that every time a subcontractor’s bid was accepted, the sub had to call or fax its insurance agent, who then had to get the general contractor (and any other required upstream entities) added as additional insureds. Some years ago, though, the process was significantly simplified with the advent of “blanket” or “automatic” additional insured language.
When a policy has a blanket additional insured provision, anybody who meets the provision’s requirement will automatically have additional insured coverage (within the limitations set forth in the additional insured provision). This means that the sub no longer needs to call its agent every time a bid is accepted. Rather, the sub just needs to make sure to check that the requirement to trigger the automatic additional insured coverage are met.