Certificate Holder Vs Additional Insured

July 27, 2023

The devil is in the details, as the saying goes, and that holds true for insurance policies. One misunderstanding or misreading of language in insurance documents like certificates of insurance or commercial general liability (CGL) policies could be the difference between being liable in a lawsuit or not.

While each of these terms is relevant to receive the right coverage to protect each entity, they mean completely different things. Understanding these differences and nuances is important when you’re dealing with insurance policies for your business and other businesses that you work with.

Below is a more in-depth explanation of what a certificate holder vs additional insured is.

Certificate Holders & Additional Insureds: What’s the Difference?

Certificate holders and additional insureds represent two completely different entities when it comes to insurance coverage.

Additional insureds extend coverage to subcontractors, vendors, and other relevant parties such as clients, lenders, and joint-venture partners. By listing them as additional insured on the endorsement and sometimes the COI, you can ensure comprehensive protection for your business.

By being listed as an additional insured on the endorsement and sometimes the Certificate of Insurance (COI), these parties can benefit from the same level of protection as the policyholder.

Certificate holders, is the recipient of the Certificate of Insurance (COI) from the insured party.  The purpose of issuing the COI is to provide evidence of the insured’s adequate coverage. It is important to note that COIs DO NOT alter the insurance policy or grant the certificate holder the ability to file a claim. Instead, they merely serve as a snapshot of coverage at the time of issue. 

Regularly checking COIs is crucial for your risk management process as policyholders can modify or terminate their coverage at any given time. Failing to request a renewed COI could lead to uncertainty regarding the existence of coverage.

General Liability Insurance

General liability insurance provides coverage for things such as bodily injury, property damage, reputational harm and more. 

Accidents can lead to costly expenses such as medical bills, attorney fees, and damages, but with this coverage, you can rest easy knowing that these costs will be taken care of.

When working with others, it’s crucial to request Certificates of Insurance (COIs) to confirm their coverage under a general liability policy. This extra step ensures that you won’t be held responsible for any claims made against them. Safeguard your business and minimize risk by taking this simple precaution.

The Certificate of Insurance

A Certificate of Insurance, or COI, is a document provided by an insurance company that provides a snapshot of important insurance policies such as dates, coverage limits, and who has coverage under the policy. It is typically requested by a party that is going to do business with another company, whether it be as a vendor, subcontractor, tenant, etc.

The COI is a very important document for all parties that are about to engage in a business relationship. It helps to verify that the other entities hold sufficient insurance coverage for the job at hand.

Certificate Holders

Certificate holders are people and/or parties who have requested a COI. They officially become a certificate holder once they are provided the COI by the insurance company.

Policy Holder

The policy holder is the primary person or entity that is listed on an insurance policy. This person or entity is the one who took out the insurance policy in the first place and is responsible for paying all associated premiums.

Policy holders are the ones who the ultimate liability lies with should anything go wrong during a job, unless explicitly listed in a contract agreement. 

Additional Insureds

Additional insureds get added to policies to protect the policy holder. This happens in cases where, for instance, the policy holder hires a subcontractor to do parts of a job for them. This helps to provide additional coverage should the subcontractor, in this example, cause any damage while on the job.

It is important for certificate holders to review all the details of a COI, including the additional insureds to ensure they are fully protected. Business owners who request a COI are less likely to be a victim of fraud, for instance, as they will work with only reputable companies with proper insurance.

In addition, a certificate holder may recover any damages from an insurer that has failed to pay out a claim that they rightfully owe.

How Can You Ensure Coverage?

The best way to ensure coverage for any contractors or subcontractors you hire, or other third-party vendors you work with, is to request a COI. This allows you to verify that these entities have the proper insurance coverage that’s relevant to the job at hand and that the policies are active.

Requesting the COI and verifying the coverage at the start of a job is only the first step, though. Certificate holders must also stay on top of the insurance coverage to make sure they’re protected all the way through a job.

This can sometimes be challenging if the certificate holder deals with multiple vendors and third-parties they work with. That’s why partnering with Evident to get a COI tracking program is so valuable. It allows you to always stay on top of not just collecting COIs but monitoring them so you’re always protected.

Ensuring Coverage: Boosting Efficiency and Compliance with COI Tracking Software

To adequately protect your vendors and company, it is crucial to incorporate a COI tracking software into your risk management program.
By implementing a powerful tool such as Evident, you can streamline the process of certificate of insurance or proof of insurance renewals, eliminate tedious manual data entry, and effortlessly enforce compliance…all in a single click. 

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