How does the coverage differ between named insured and additional insured?

The distinction between named insureds and additional insureds is crucial in understanding liability coverage in insurance policies. Named insureds are the primary entities specified in the policy and hold the principal rights and responsibilities under that policy. They enjoy full coverage as defined by the terms of the policy, which includes the right to make decisions regarding the policy, such as policy alterations and termination.

On the other hand, additional insureds are typically entities or individuals added to the policy to provide them with some degree of protection against specific liabilities arising from the named insured's operations or activities. While additional insureds receive certain benefits of the policy, they do not possess the same level of rights as named insureds. Their coverage is limited to what is outlined in the policy, which often only covers liability that may arise from the actions of the named insured.

This hierarchy of coverage rights is critical for understanding how liability insurance functions in various scenarios, such as in contractual agreements where one party requires the other to name them as an additional insured. Hence, the answer conveys that named insureds hold the primary policy and its full benefits, while additional insureds receive only the coverage that the named insured allows, typically limited to particular circumstances.