What’s the Difference Between a Certificate Holder and an Additional Insured?

Business owners often get confused regarding the difference between a certificate holder and an additional insured.

Mike Fusco explains the differences in today’s video using both technical terms and non-specialists’ terms.

We hope you gain a better understanding after watching.

You may also visit our blog to read more about this critical topic.

THE DEFINITION OF A CERTIFICATE HOLDER

Per IRMI (International Risk Management Institute), a certificate holder is:

the entity that is provided a certificate of insurance as evidence of the insurance maintained by another entity. In standard certificate forms, the certificate holder is usually listed in the space provided for that purpose

THE DEFINITION OF AN ADDITIONAL INSURED

IRMI’s definition of additional insured states:

a person or organization not automatically included as an insured under an insurance policy who is included or added as an insured under the policy at the request of the named insured. A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., wanting to protect church members performing services for the insured church) or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of property leased by the named insured). In liability insurance, additional insured status is commonly used in conjunction with an indemnity agreement between the named insured (the indemnitor) and the party requesting additional insured status (the indemnitee). Having the rights of an insured under its indemnitor’s commercial general liability (CGL) policy is viewed by most indemnitees as a way of backing up the promise of indemnification. If the indemnity agreement proves unenforceable for some reason, the indemnitee may still be able to obtain coverage for its liability by making a claim directly as an additional insured under the indemnitor’s CGL policy. In property insurance, additional insured status is most often used in conjunction with a premises lease agreement between the named insured as the lessee and the owner of the leased building, in which the insured tenant is required to purchase insurance on the leased building and name the building owner as an additional insured on the insurance policy with respect to the leased building

EXPLAIN THE DIFFERENCE IN NON-SPECIALISTS’ TERMS

We know insurance definitions confuse people.

Think of a certificate holder as a formal presentation of an entity’s insurance, with the certificate holder listed in the space provided on the ACORD form.

A certificate holder gains no rights or access to the insurance policy.

However, an additional insured does. Of course, the amount of protection provided by the indemnitor under the policy differs based on the endorsements issued.

In some form, the additional named party does have rights of an insured under its indemnitor’s CGL policy.

It is common to receive requests for additional named insured endorsements if you operate a construction firm, own a manufacturing company, lease space from a landlord, work on other’s properties or locations, or have signed contracts requiring an additional insured.

HOW CAN WE FURTHER ASSIST

You may complete the form at the bottom of our BLOG post to connect with an FOA agent. Or, you may call Mike directly at 858-384-1507.

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