Certificate Holder and Additional Insured

Many people are familiar with the terms Certificate holder and Additional insured, but what do they mean and what are the differences? These terms are usually associated with liability insurance policies. (e.g. General Liability, Auto Liability, Employers Liability)

Certificate Holder vs. Additional Insured 

To understand insurance starts with knowing who and how the policy covers. Distinguishing between these three terms makes it easier to understand.

Insurance policyholder: the insurer of the insurance contract and the direct beneficiary of the coverage. Also known as “Named Insured”. The Named Insured is the only entity that has fully policy rights.

Certificate Holder: Policyholders agents are asked to issue insurance certificates (COIs) to the company or entity that hired the named insured to perform the work. For example, it could be a subcontractor that provides COI to the main contractor. The insurance policy designates the main contractor as the certificate holder, i.e. he receives the document. The COI is only proof of insurance at this time. It provides general details of policyholder coverage but does not change the policy in any way. It’s just The subcontractor’s way of  saying “I have insurance.”

The Certificate Holder will not receive any coverage from a policy unless he or she is also named as an Additional Insured on the policy.

It is important to review COIs regularly as policyholders can cancel or reduce their coverage at any time. Without requesting the renewal of the COI, the holder of the certificate would never know whether the insurance cover still exists.

Additional insured: Many contracts often require that policyholders extend insurance coverage to other entities. This is most commonly done through Additional Insured endorsements. As an example a subcontractor can add the main contractor to their policy as Additional Insured or a tenant may add the landlord to their policy as Additional Insured. It’s important to note that Additional Insured only provides limited coverage, it DOES NOT replace the coverage of the main contractor or landlord.

Rights 

Being a certificate holder DOES NOT convey any rights on the policy. It only serves as a proof of coverage. An Additional insured however does have some limited coverage on the policy which can provide some rights on the policy. An Additional insured cannot make changes or request endorsements to the policy with out the policy holders authorization, but they may have the right to file claims and assert certain coverages on the policy. This is all based on which Additional insured endorsement is placed on the policy and the main policy language, so it’s important to understand which endorsement works best based on the relationship between the policy holder and the Additional insured.

Summary of the holder of the certificate and the additional insured.

Although the Certificate holder is a document that confirms the existance of insurance, an additional insured provides limited coverage according to the insurance policy forms and endorsements. It should be noted that the Contractor or Client may be a certificate holder as well as an additional insured.