The Difference Between an Additional Insured and Certificate of Insurance

The Difference Between an Additional Insured and Certificate of Insurance

Your business may be your biggest investment yet and you know how important the business protection is in case you suffer a loss; however, as a business owner, do you know the difference between an “additional insured” and “certificate of insurance” and how it may affect your business success?

Never Assume; Always Ask for a Certificate of Insurance

Additional Insured and Certificate of InsuranceA certificate of insurance is a document that verifies current insurance in effect for that specific business. You should never assume that anyone has insurance and should always ask for proof of current insurance before you enter into any type of business contract/job. Imagine a loss happening and you find out AFTER the fact that there was no applicable insurance coverage and now you are left holding the purse strings for the damages. Most business owners will have it readily available when entering into a job agreement/contract, but make sure you ask to see it.

An Additional Insured

As a business owner, you must know the difference between additional insured and certificate of insurance and how they are similar yet quite different. An additional insured means BEFORE you enter into a job contract, you must make sure that you are named as an “additional insured” in order to be protected for covered losses that may result from the “named insured’s” negligence on the certificate of insurance policy. An endorsement can be written that specifically names “you” (either by blanket or specific name) as someone that will be insured during the scope of that particular job. This may apply to painters, electricians, plumbers, or insulation installers, to name a few.

Consider This Happening

Assume you are the general contractor for a job and you hire an electrician as a subcontractor to complete work for this specific job. The hired electrician (subcontractor) installs some faulty wiring that inevitably causes a fire that destroys the building where the work is being done. Because of the subcontractor’s negligence, there is now a lawsuit filed, substantial damages to the building incurred, and the job is on hold indefinitely. By being named an “additional insured” the general contractor may obtain protection under the subcontractor’s policy up to the specified limits of liability.

Cover Your Bases 

Before you enter into any business agreement/contract, it is recommended you cover all the bases. Know there is insurance before the work begins (certificate of insurance) and make sure your interest is protected (additional insured) in order to protect your livelihood, name, assets, and business. Otherwise, you may be faced with some serious economic consequences and hence, your business success compromised. Contact us at RCI Insurance Group at 918-341-6081 with any and all of your questions regarding Oklahoma business insurance and how these two terms may affect it.



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