Understanding COIs – Certificate Holder vs. Additional Insured

Financial risk arising from unplanned accidents is a common occurrence in the world today. In order to mitigate these risks and safeguard your business, a liability insurance policy is an important investment. Having a Commercial Liability Policy (CGL) on a Certificate of Insurance helps protect against risks when working with contractor networks.

Companies who wish to contract with an independent contractor for their services will typically stipulate within the terms and conditions of their contract certain insurance requirements, such as requiring a policyholder to list them as an additional insured to their policy, to mitigate their risks in the event of a negligent incident committed by the independent contractor that has a financial impact (i.e. causes injury to a third party/customer or property damage) and a claim needs to be created against the contracted company’s (policyholder) general liability policy.

When going to verify proof of additional insured, it is common for people to confuse what would be considered a certificate holder insurance rather than an additional insured on a certificate of insurance. Knowing the difference is important.

Certificate Holder vs. Additional Insured: What’s the difference?

The certificate holder named on a policy will receive a copy of the policyholder’s certificate of insurance (COI), which verifies insurance and usually contains information on the type and limits of coverage.  The entity will be listed in the CERTIFICATE HOLDER section of the COI.

Certificate holders are more likely to be notified or receive notifications in case of changes, annual renewal, or cancellation of the policy by the policyholder.  However, they are not authorized to claim under the policy.

The entity that has the rights and authorization to make a claim is the additional insured.  On COIs, additional insured entities are indicated in these two ways:  By an X or checkmark in the ADDL INSR box on the General Liability section of the COI, and/or the additional insured entity is named in the DESCRIPTION OF OPERATIONS section.

As an additional insured, you may receive notices that coverage has been canceled from the insurance carrier. However, you are more likely to receive notices of cancellation and changes in coverage from the insurance broker if you are a certificate holder as well.