If you run an installation business in California—whether you install appliances, HVAC systems, glass, or electrical components—you’ve likely heard the term “additional insured” when working with commercial clients. Many property managers, general contractors, and even homeowners’ associations require you to add them as an additional insured before you can start a job.
But what does this really mean? More importantly, how does it affect your business and your relationship with clients? Let’s break down the meaning, the benefits, and the risks of additional insured status so you can approach contracts with confidence.
An additional insured is a person or business added to your insurance policy, typically your general liability insurance. This endorsement extends some of your policy’s protection to the client, covering them if they are sued for something connected to your work.
For example, if you are installing windows at a commercial property in San Diego and a passerby is injured by falling glass, both your business and the property manager could be sued. If the property manager is listed as an additional insured on your policy, your insurance may cover their defense and damages.
From the client’s perspective, requiring additional insured status shifts risk away from them and onto your business. Some common reasons include:
Risk Transfer – Clients want assurance that if your work leads to an accident, they won’t have to shoulder the full cost.
Legal Protection – Many California contracts legally mandate contractors to carry insurance and add the client to reduce liability exposure.
Financial Safeguards – By being covered under your policy, the client avoids paying out-of-pocket for legal defense or settlements tied to your work.
Compliance – Government contracts, HOAs, and large corporations often have strict requirements for contractor insurance, making additional insured endorsements non-negotiable.
This endorsement automatically covers any client you sign a contract with, without naming them individually. It’s efficient for businesses that frequently work with different clients.
This lists the client by name in the policy. It’s commonly used for large projects where one property owner or general contractor wants direct assurance of coverage.
Ongoing Operations: Covers the client while you are actively working on the project.
Completed Operations: Extends coverage even after the work is finished, which is important if defects or accidents occur later.
When a client becomes an additional insured, they receive:
Legal Defense: Your insurance covers their legal fees if they are brought into a lawsuit tied to your work.
Coverage for Accidents: If property damage or bodily injury arises from your project, they’re protected.
Peace of Mind: They know they are not solely responsible for risks created by contractors.
While granting additional insured status is common practice, it comes with considerations for your business:
Shared Policy Limits: Adding an additional insured does not increase your policy limits. Instead, your client shares the same limits, which means less protection for you if a large claim occurs.
Increased Responsibility: You may be liable for claims that could have otherwise fallen on the client.
Contractual Obligations: Failing to provide proof of additional insured status can cause delays or lost contracts.
For many California contractors, the business benefits outweigh the risks, but it’s important to carefully evaluate each endorsement request.
California’s construction and contracting laws make insurance compliance especially important. Some key points to remember include:
Public Contracts: State and municipal jobs almost always require proof of additional insured endorsements.
Licensing Requirements: Certain licenses in California require contractors to maintain liability insurance, making additional insured endorsements part of routine business.
High-Value Claims: With California’s high property values and litigation costs, failing to extend coverage to clients could result in disputes or loss of business opportunities.
Review Contracts Carefully – Make sure you understand the type of additional insured coverage required (ongoing, completed operations, or both).
Work with Your Broker – A licensed California insurance broker can help you secure the right endorsements and avoid gaps in coverage.
Keep Documentation Ready – Clients often require Certificates of Insurance (COIs) as proof. Keeping these organized speeds up the contracting process.
Evaluate Your Limits – Since additional insureds share your limits, consider raising your liability coverage to ensure you remain protected.
Update Policies Annually – As your business grows and projects expand, adjust your policies to reflect new risks and higher-value contracts.
For California installation businesses, adding clients as additional insureds is more than a formality—it’s a critical step in winning contracts and building trust. While it shifts some protection to your clients, it also places greater responsibility on your business. By understanding how additional insured endorsements work, you can negotiate contracts confidently, avoid costly mistakes, and strengthen professional relationships.
To explore tailored insurance solutions that protect both your business and your clients, visit Western Insurance