Additional insured and additional interest basically means the same thing when they are discussed in regards to car insurance. There may be subtle differences in what they mean; automobile insurance companies tend to interchange the terms. You can see that the terms additional insured and additional interest are both listed together in our car insurance terms glossary. A lien holder may be an additional interest or an additional insured.

In our glossary we define additional insured or additional interest as a person or an organization, other than the named insured or covered person, who is protected under the named insured’s auto policy. Basically additional insured means a person or company/organization other than the named insured listed on an insurance policy, which is protected under the terms of the policy. For example if an auto is leased, the leasing company will usually want to be listed as an Additional Insured as well as a lien holder or loss payee on your car insurance policy. This protects the leasing company if it is named in a lawsuit for an accident caused by a policyholder.

If you have a loan on your car then your financing company can require you to have them listed on your auto insurance policy as the lien holder and as an additional interest since they have an interest in your vehicle and the coverages on it.

A lien holder will normally require you to have certain insurance coverages, typically state liability coverages plus “Full Coverage” which includes comprehensive and collision coverage, on your vehicle and one way to make sure you have the proper coverages on your vehicle, their asset, is for them to be listed on your policy as an additional insured.

Any lien holder, additional interest, or loss payee listed on your policy will receive notification of auto insurance. A copy of the declaration and/or any policy status forms are mailed to them. So if you change your coverages, cancel them so the car is uninsured or lower your coverage from Full Coverage to Liability only, your lien holder will be informed. If a lien holder finds that the insurance they mandate is not on their asset, the car, the way in which they require it to be then likely the financial paperwork states that they can place “forced” insurance on the car.

If your agent is not able to explain these terms to you or fulfill your car insurance needs, contact a agent and they can explain not only insurance terms but also tell you how they can get you low cost car insurance.

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Michelle Megna
Contributing Researcher

Michelle is a writer, editor and expert on car insurance and personal finance. She's a former editorial director. Prior to joining, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News.