In insurance terminology, Additional Interest means an uninsured or insured third party that is named in the insurance policy as having an interest in the insurance policy of the holder. For instance: if there is any change made in the policy of the insuree (any modification or cancellation) of the policy, the party who has been labeled as additional interest is notified of the said change.
It basically means that someone who is not directly involved in the insurance but gets affected by the changes made by the insurance policy. However, this term can indicate a different meaning in different industries. For example, in the real estate industry, only the homeowner has a vested interest in what goes on in the insurance policy. But in the automotive industry, the vested parties involved can be more than one. We will discuss the details in the below paragraphs.
Additional Interest in Automotive industry
There are two different types of terms namely additional interest and additional insured, they mean the same thing in the Automotive industry and particularly in car insurance. There can be a subtle change of meaning when they are implied in other industries. But in car insurance terms glossary they are used interchangeably.
It basically means that the lien-holder might be an additional insured or additional interest in the insurance policy. It is defined as the additional person or any organization that is insured/covered in the insurance policy of the holder and gets protection under the said policy.
Benefits of Additional Interest
For instance, there is a car that is leased by the leasing company and it wants to cover the company in addition to the driver who will be driving the car. Now, if the car that a particular driver gets involved in the accident, the car company is covered in the Additional Interest. In this manner, anyone involved in the accident can not sue the car company that has rented the vehicle.
Apart from that, the biggest benefit of having an Additional Interest is monitoring that the driver is adhering to the policies by keeping up with the insurance policy. In case the driver withdraws the insurance or fails to file premiums that result in the withdrawal, the car company is notified immediately. That is because the car company is noted as Additional Interest in the insurance policy of the driver. Hence, this works as a check against the malpractices, if any.
Apart from that, if you have a loan on your car, the finance company is the Additional Interest in your policy. That is because they have an interest in what goes wrong while you owe them money. For example, if your car gets involved in an accident and you didn’t have the proper insurance to cover that damage, the finance company loses its money. However, through this interest, the finance company can check on timely intervals whether you have the type of policy that covers all types of damages.