Certificate Holder or Additional Insured, That is the Question?

Posted May 24, 2024

Author – Chris Fantaski, CLCS, CISR Elite, CPIA, Account Advisor – Horst Insurance

Have you been asked to provide a certificate of insurance on behalf of your business to a vendor? Does the vendor just want a certificate, or do they want to be listed as an additional insured? This is a common request in commercial insurance.  Do you know what the difference is? Let us dive into the specifics of each request and hopefully give you a better understanding of what your vendors are asking for.

First, we will look at the simpler of the two, a Certificate Holder. Being listed as a Certificate Holder is simply having a vendor listed on the certificate being provided. A certificate is a “snapshot” of your insurance coverage. A certificate is being provided as evidence of insurance to show the time period, policy types, and policy limits that are in place for your business. Being listed as a Certificate Holder does not give the vendor any rights to your policy. Certificates of insurance allow the certificate holder to ensure coverage is in place to handle claims so their insurance will payout and the certificate holder is not held liable. There are no additional costs to being named as a Certificate Holder. A business can request as many certificates (with a holder listed) throughout the policy term as they want without any cost.

Now let us take a look at being named an Additional Insured on a certificate. Being named as an Additional Insured on a certificate gives the vendor rights to the same coverage benefits as the policyholder. The Additional Insured endorsement protects the vendor under your business policy, allowing them to file a claim in case they are sued for your actions. Simply put, Additional Insured status gives coverage to parties not originally named on the policy and says your policy is the first to payout in the event of a claim. Unlike being named as a Certificate Holder, there is typically a premium charge from insurance companies to add this endorsement. To add a single Additional Insured, typically there is a one-time charge for each from the insurance company. If your business needs to grant multiple vendors Additional Insured status, a blanket Additional Insured endorsement could be added to the policy for a flat one-time fee. Some insurance policies will include an automatic Additional Insured status for vendors, provided they enter into a contract or agreement with the insured. You will need to check with your individual insurance carrier to see what Additional Insured options are available.

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