A certificate of insurance gives basic information about someone's coverage. Insurance agents fill out standard forms, filling in blanks based on the kind of coverage being secured. If you contract with someone to perform work for you, you might want to ask to be listed as an additional insured on their certificate. If you are named as an additional insured, you are protected under the policy even though you didn't buy the insurance.
Information on Certificates
Certificates usually include a list of all the different types of insurance bought by the insured person. For example, it might show insurance for general liability, automobiles or workers' compensation. It also usually shows the policy numbers, the dates the insurance covers, and the name of the insurance company. The certificate also contains contact information for the agent who filled out the certificate.
An agent can list you as an additional insured in a couple of different ways. He can put an "x" in a box titled "additional insured" and then list you as the certificate holder. He can also write notes in an area titled "description of operations." Sometimes an agent writes something like, "Company X is an additional insured under the general liability policy as required by written contract."
If you are an additional insured, you get a free lawyer from the insurance company if someone sues you for something covered by the insurance. The insurance company will also pay a judgment or settlement just like it would for the person who bought the policy. This can save you from having to pay your own lawyers or pay the settlement with your own money.
Unfortunately, certificates really don't give any rights in and of themselves, unless the policy is changed to list you as an additional insured. The certificate might show one thing, but the policy might show another. Certificates don't hold up in court, so be sure to get an endorsement form from the insurance company showing you as an additional insured. Also, you have to share the policy limits with the person who bought the coverage, so there may not be enough money to protect both of you from a big lawsuit.
E.S. Martin is an attorney who has worked in civil litigation for more than eight years. He focuses his work in insurance, personal injury, subrogation and risk management.