This article was written by Sherelyn Schoch on Sept 07, 2024.

Hey there! If you’re in the contracting game, you know the job isn’t just about swinging a hammer or laying down asphalt. There’s a whole world of paperwork and insurance terms that can be just as tricky as the toughest job site. Today, we’re diving into the nuts and bolts of Certificates of Insurance and Additional Insured statuses—two things that, while not exactly glamorous, are crucial for keeping your business running smooth.

What is a Certificate of Insurance?

A Certificate of Insurance (COI) is essentially a snapshot (or resume) of your insurance coverage as of the date of the certificate. It’s a document provided by your insurance carrier that outlines your insurance types, the coverage limits, and the policy periods. Think of it as proof of your insurance status.

Here’s what a COI typically includes:

  • Policy Types: Details of the insurance policies you hold, such as general liability, workers’ compensation, or auto insurance.
  • Coverage Limits: The maximum amount your insurance will cover for any given claim.
  • Policy Period: The start and end dates of your coverage.
  • Insured Parties: The names of the entities or individuals covered under the policy.
  • Insurance Carrier: The name of the insurance company that holds this insurance.

 

Why Is It Important?

For clients and project managers, a COI is crucial. It assures them that you’re properly insured, which helps them avoid potential financial liabilities arising from accidents or damages. It’s often required before you can start work on a project or sign a contract.

What Does “Additional Insured” Mean?

The term “Additional Insured” comes into play when you add someone to your insurance policy so they’re also protected under your coverage. When a client or subcontractor requests to be listed as an Additional Insured, they’re essentially asking to be covered by your policy in the event of a claim related to your work.  The certificate holder may list the actual type of form that they request to be added to the policy.

Why Would You Add Someone as Additional Insured?

  • Contractual Requirements: Many contracts require contractors to add clients or other parties as Additional Insureds to ensure they’re protected if something goes wrong.
  • Liability Protection: It provides an extra layer of protection for the client or other parties involved, covering them for claims related to your work.

How Does It Work?

When you add someone as an Additional Insured, they are entitled to the same coverage you have, but only for claims that arise from your operations. For example, if a client is named as an Additional Insured and a claim is made due to your work, their defense and indemnity costs could be covered under your policy.

Key Differences and Interplay

While both the Certificate of Insurance and Additional Insured status are related to insurance, they serve different purposes:

  • Certificate of Insurance: Acts as proof of coverage as of the date of the certificate. It shows what types of insurance you have and your coverage limits.
  • Additional Insured: This provides extra coverage for a party (like a client or subcontractor) related to your work, protecting them from claims associated with your operations.

Best Practices for Contractors

  1. Keep Your COI Updated: Ensure that your COI is current and accurately reflects your coverage. Clients might request updated certificates periodically.
  2. Understand Contract Requirements: Before signing a contract, thoroughly review the insurance requirements and determine if you need to add any parties as Additional Insureds.
  3. Communicate with Your Insurance Provider: Discuss any changes in your projects or coverage needs with your insurance agent to make sure you’re adequately covered.

**If you are one of our policyholders, you can email us at service@yetterins.com to get your certificate!  You will need to let us know the full legal name and address of the certificate holder as well as their terms (are they to be added as additional insured?)

Wrapping It Up

Insurance might not be the most exciting part of the job, but it’s crucial for keeping your business in the clear. A Certificate of Insurance shows you’re covered, while adding someone as Additional Insured extends that coverage to others. Keep these elements in check, and you’ll steer clear of unnecessary headaches.

Got more questions about insurance or need advice on a specific situation? Feel free to reach out or consult with your insurance provider. Until then, keep up the hard work and stay safe out there!

If you feel that this guide was helpful to you, please share it with your fellow contractors or anyone who might benefit from it. Until next time, happy contracting!