If you own a business, you may eventually be asked by a landlord, customer, contractor, or business partner to provide a Certificate of Insurance (COI) or add someone as an Additional Insured to your policy.
These terms are often used together, but they are not the same thing.
Understanding the difference can help you avoid confusion when a client or contract requires proof of insurance.
What Is a Certificate of Insurance?
A Certificate of Insurance, commonly called a COI, is a document that provides a summary of certain insurance coverage.
A certificate may show information such as:
- Name of the insured business
- Insurance company
- Policy number
- Policy effective and expiration dates
- Types of coverage
- Liability limits
- Certain endorsements or coverage information
A COI is commonly used to provide evidence that a business has insurance.
For example, a commercial landlord may ask a tenant to provide a certificate showing that the tenant carries general liability insurance.
However, a certificate is not the insurance policy itself. It does not create coverage that does not already exist under the policy.
What Is an Additional Insured?
An Additional Insured is a person or organization that is added to an insurance policy by endorsement or other policy provision, depending on the policy.
The additional insured may receive certain liability protection under the named insured’s policy, subject to the endorsement’s terms, conditions, limitations, and exclusions.
For example, suppose a business rents commercial space from a property owner.
The lease may require the business to add the landlord as an Additional Insured on the business’s general liability policy.
The business may then provide the landlord with a COI showing the applicable coverage and Additional Insured status.
The COI documents the insurance, while the endorsement provides the additional insured coverage.
A COI Does Not Automatically Make Someone an Additional Insured
This is one of the most important distinctions to understand.
Simply listing an organization on a Certificate of Insurance does not automatically give that organization coverage under the policy.
If a contract requires Additional Insured status, the appropriate endorsement needs to be included in the policy.
The certificate can then be used to provide evidence of that coverage.
Why Do Contracts Require Additional Insured Status?
Businesses may request Additional Insured status because they want some protection from liability arising from the named insured’s operations.
For example, a general contractor may require a subcontractor to name the contractor as an Additional Insured.
A landlord may require a commercial tenant to name the landlord.
A property manager may have similar requirements.
These requirements are generally established through contracts, leases, or other written agreements.
Additional Insured Coverage Has Limits
Being an Additional Insured does not mean the other party receives unlimited protection under your entire insurance program.
The scope of coverage depends on the applicable endorsement.
Some endorsements may limit coverage to liability arising out of your operations, premises, or work. Other endorsements may have different conditions or limitations.
That is why the exact wording of the insurance requirement matters.
What About a Waiver of Subrogation?
A contract may also require a Waiver of Subrogation.
This is different from Additional Insured status.
Subrogation generally allows an insurance company that has paid a claim to seek recovery from a responsible third party, subject to the policy and applicable law.
A waiver of subrogation can limit the insurer’s ability to pursue a specified party for recovery when the appropriate waiver applies.
For example, a lease could require:
- Additional Insured status
- Waiver of Subrogation
- Primary and Noncontributory coverage
- Specific liability limits
These provisions address different aspects of the contractual insurance requirement.
What Does “Primary and Noncontributory” Mean?
You may also see this requirement in a contract.
Primary and noncontributory wording generally addresses the order in which applicable insurance responds when more than one policy could potentially apply to a claim.
The exact effect depends on the applicable policy language and endorsement.
This is another reason why simply looking at a Certificate of Insurance may not tell the entire story.
What Should You Do When a Customer or Landlord Requests a COI?
Start by reviewing the actual insurance requirements.
Don’t rely solely on a request that says, “Send me a certificate.”
Look for requirements involving:
- Liability limits
- Additional Insured status
- Waiver of Subrogation
- Primary and Noncontributory wording
- Specific endorsements
- Workers’ compensation
- Professional liability
- Auto liability
- Other coverage requirements
Then provide those requirements to your insurance agent.
Your agent can determine whether your existing policy satisfies the requirements or whether an endorsement or other policy change may be necessary.
Don’t Wait Until the Last Minute
Insurance requirements often appear when you’re signing a lease, accepting a new client, entering a vendor agreement, or starting a new project.
Waiting until the last minute can create unnecessary delays if an endorsement needs to be issued.
It’s generally better to send the requirements to your insurance agent before signing the contract so the coverage can be reviewed.
The Bottom Line
A Certificate of Insurance provides evidence of certain insurance coverage.
An Additional Insured is a person or organization that receives certain coverage under another party’s insurance policy, subject to the applicable endorsement.
They often work together, but they are not interchangeable.
If a Florida business client, landlord, contractor, or other organization asks for a COI or specific insurance requirements, review the request carefully and discuss it with your insurance agent before assuming your existing policy satisfies the requirement.
Nieves Insurance Group helps Florida small businesses understand their insurance requirements and explore coverage options based on their individual operations.
