Additional Insured FAQ
It is important for every owner and operator to make sure that any person or party with “insurable interest” is listed on the PMMIC insurance policy as an additional insured. What is insurable interest? It can be defined as a right, legal share, or financial involvement in a property, product, equipment or something else altogether.
Who Can be Considered an Additional Insured?
There are many different scenarios which could indicate that an individual or entity could have insurable interest and could then be counted as an additional insured. A bank or lending institution that holds a note or a mortgage on the property in question has insurable interest as does a property owner that leases a property to someone else to use or operate. A seller of a property on contract to another party (buyer) has insurable interest. A party who owns some of the equipment at the site and leases it to the operator or a party that owns the fuel at the site and has the operator sell it on consignment has insurable interest. These are the most common situations that PMMIC encounters.
Why Add an Additional Insured to Your Policy?
The issue regarding insurable interest is that someone, or an entity, is in a situation where they potentially need protection under the PMMIC insurance policy along with the named insured or the named party on the insurance policy and is the one responsible for paying the premium, submitting policy forms, etc. Many times, a mortgage or lease may require the other person/party to be listed as an additional insured on the PMMIC policy.
Let’s look at a lending institution as an example:
Mary and Sue are business partners that borrowed money from ABC Bank to buy a convenience store to operate. A few years down the road, one of the partners unexpectedly passes away and the remaining partner struggles to keep the business afloat. They eventually go bankrupt and their pollution liability policy lapses. The surviving partner walks away from the property and the bank forecloses on the mortgage. The bank gets the property back through foreclosure a year later, then discovers that there has been an unknown release from the UST’s on the property. ABC Bank is not listed on the policy as an additional insured and now faces the possibility of having to clean the property up before selling it or selling it at a greatly reduced price.
How about the situation where someone has sold the property on contract and the buyer subsequently walks away? The same kind of situation could occur and since the seller is still the owner on record for the property, the regulating authority may require the seller to pay for clean-up costs out of their own pocket.
Another example is an entity that leases the dispensers to the operator and consigns the fuel. Again, the lessors could be held responsible for corrective action if they are not listed on the policy.
In any of cases described above, the problem could become more complicated and costly if there are third parties involved claiming property damage or bodily injury as a result of a release.
How Can I Add or Remove an Additional Insured?
Typically, this information is supplied on the initial application for insurance. If something changes from one year to the next and a party needs to be added to or removed from the policy, simply fill out and submit the Additional Insureds – Addition/Deletion form. PMMIC may require a copy of the lease, mortgage, or contract between the two parties be submitted to confirm the insurable interest exists.