In this continuing series we are discussing some of the more common misconceptions of the often misunderstood aircraft insurance policy. We welcome any discussion regarding aviation insurance matters. Keep in mind, the only truly stupid question is the one that is never asked.
Adding an additional insured to an insurance policy is simple and usually inexpensive. In fact, many companies routinely request that they be added as additional insured before they will allow their employees to ride on a general aviation aircraft. This is a means of assuring the party responsible for the passenger that the aircraft is properly insured.
So, why not add everyone flying in the aircraft? Limits. You buy specific limits of liability for your aircraft. If an additional insured must be defended under your insurance policy, it dilutes the total amount remaining to defend you and to indemnify on your behalf. The next time you are asked for a certificate of insurance naming some person or organization as additional insured, make sure you have a good reason to share your total limit of liability insurance. They may be satisfied with just a simple certificate of insurance which certifies the aircraft is insured and for what limits. It does not have to include additional insureds and therefore would not dilute your coverages.