Legal Definitions - assured

An assured is the individual or entity who is protected by an insurance policy and is entitled to receive the benefits or payout if a covered loss or damage occurs. While often used interchangeably with "insured," the term "assured" specifically emphasizes the party for whose benefit the policy is written and who will receive the financial compensation. This distinction becomes important when the person whose life or property is insured is different from the person who stands to gain from the policy's payout.

• Example 1: Business Key Person Insurance

  A small technology startup takes out a "key person" life insurance policy on its brilliant lead software engineer. If the engineer were to pass away, the company would suffer a significant financial loss due to the disruption and cost of finding a replacement. The policy is written to pay out to the startup. In this scenario, the assured is the startup company, as it is the entity that will receive the financial benefit from the policy if the covered event (the engineer's death) occurs, helping it mitigate the economic impact.

• Example 2: Parental Insurance for a Child's Property

  A parent purchases an insurance policy to cover a very expensive, custom-built racing bicycle used by their teenage child for competitive events. The policy protects against theft or damage to the bicycle. The parent pays the premiums and would receive the reimbursement if the bicycle were stolen or destroyed. Here, the parent is the assured because they are the one who would receive the insurance payout to cover the loss of the bicycle, even though the bicycle is primarily used by their child.

• Example 3: Landlord as an Additional Assured

  A commercial property owner leases office space to a new tenant. As part of the lease agreement, the landlord requires the tenant to obtain liability insurance and to name the landlord as an "additional assured" on the policy. If a client visiting the tenant's office slips and falls, and then sues both the tenant and the landlord for negligence, the landlord's inclusion as an assured means they would also be protected by the tenant's policy against potential liability claims, receiving coverage for legal defense costs and any damages awarded.