What risk is reduced by adding an additional insured?

Adding an additional insured to an insurance policy primarily reduces the personal liability risk of the named insured. By including an additional insured, typically a third party with an interest in the policyholder's activities, the named insured extends coverage to this party, thereby sharing the risk associated with liability claims arising from the insured's actions or operations. This inclusion provides legal protection for the additional insured in case of lawsuits or claims, thereby reducing the risk that the named insured would be financially responsible for injuries or damages that occur in relation to the insured's activities.

The other options may present situations where the insurance coverage might be affected, but they do not address how the personal liability risk for the named insured is directly mitigated by the presence of an additional insured. The focus remains on protecting the named insured from potential claims that could arise, as the additional insured will also have coverage under the policy.