As the legal world becomes more complicated it is more important than ever to mitigate risks within your organization. Certificates of Insurance play a vital role in this process and wanting full coverage, above and beyond what is required traditionally, means utilizing additional insured endorsements as often as possible.
Certificates of Insurances – an overview
A Certificate of Insurance is a standard form document that takes a snapshot of the business insurance coverage you have at that date in time. It will serve as proof that you have the proper insurance coverage to support the business or job you are doing. Your potential employer may have specific coverages and limits to perform specific work and the Certificate of Insurance verifies that you are insured with the limits they require.
In another example, possible clients can request a Certificate of Insurance to do business with you. That possible client is looking for proof of insurance before they allow you to perform work on their property. Many forms can be provided, but the COI must be signed by the insurance company or broker to confirm that the insurance is current and active.
The Role of Additional Insured
An additional insured on a Certificate of Insurance is a person or entity other than the policyholder that is covered by that insurance policy. This person or entity would not have been named on the policy initially but would be added to allow protection under the insured’s policy and would be covered in an instance of a claim. In the event of an accident or negligent activity, all parties listed would be covered.
In an event where a person or entity was listed in the claim and not listed as an additional insured, that person or entity may be covered by underlying policy language, but having an additional insured endorsement that names the entity is preferable.
As they say, the devil is in the details, and the role that additional insured plays in a COI could mean the difference between financial success or failure. If the policy is written correctly then the possibility of the additional insured having to pay on a claim is very limited, which is the very reason for the insured endorsement.
There are no limits on how many additional insured are listed as they can be added for a myriad of reasons. If you have secured a loan with a bank, that bank can require you to have them listed as the additional insured. Towns or municipalities may require to be listed as additional insured for every contractor or subcontractor performing any work for that town or municipality. Larger companies could have owners, engineers, contractors, parent companies, subsidiary companies, staff, board of directors, and employees listed as additional insured.