In Depth
Most insurance covers only the named insured, the entity that bought the policy. An Additional Insured endorsement widens that circle. It grants a specified third party the benefit of the policy's coverage, usually for liability arising out of the named insured's work or product. The third party pays nothing and signs nothing; they simply get named, typically described on a certificate of insurance and backed by an endorsement to the policy form.
The reason this matters is mechanical, not sentimental. When your AI agent causes harm inside a customer's environment, the injured party rarely stops at suing you. They sue the deep pocket they can reach, which is usually your enterprise customer, the one who deployed the agent under its own brand. That customer then wants a place to send the claim that isn't their own balance sheet. If they are an Additional Insured on your policy, your coverage responds to defend and indemnify them directly, rather than them eating the loss and then chasing you through an indemnity clause.
One subtlety: being an Additional Insured is narrower than being a named insured. The added party is generally covered only for liability connected to your product or work, not for their own independent mistakes. The scope is defined by the endorsement wording, which is why the specific form matters more than the certificate that summarizes it.
What It Looks Like
Say a vendor sells an AI intake agent to a hospital network. The vendor's per-agent policy carries a $2M aggregate limit (illustrative). Before signing, the hospital's security team sends a one-line requirement: "Vendor shall name Customer as an Additional Insured." The vendor's carrier issues an endorsement and a certificate listing the hospital by name.
Months later, a patient claims the agent disclosed information it shouldn't have and names both the vendor and the hospital in the complaint. Because the hospital is an Additional Insured, the same policy that defends the vendor also defends the hospital. One carrier runs one defense, and nobody has to open a separate fight over the indemnity clause. Without the endorsement, the hospital defends itself first and argues about reimbursement later.
Why It Matters For AI Vendors
Enterprise buyers have learned that an AI agent they deploy becomes their liability the moment it goes live. Their procurement and security teams have responded by treating insurance as a gating control, and the specific thing they look for on a certificate is their own name as an Additional Insured. It is concrete and verifiable, and it gives them recourse that doesn't depend on the vendor still being solvent when a claim lands.
For an early-stage AI vendor, that turns coverage from a cost center into a sales lever. The vendor who can hand a buyer a certificate naming them clears review while a competitor is still explaining why their Tech E&O "probably" applies.