Every day companies throughout the nation enter into contracts that require their business partners to list them as an additional insured under the business partner’s insurance policies. Having your company listed as an additional insured under a policy purchased and paid for by another company can have significant benefits, such as providing your company with access to a line of insurance other than its own so that any resulting claims will not impact your company’s loss history, larger insurance limits than what your company may have purchased, and potential coverage for your company’s own negligence that may not be available through indemnification. However, many companies fail to ask for reliable proof of the additional insured placement and instead merely require their business partners to provide them with “certificates of insurance.” This is a mistake.
Examine The Language On The Certificate -
The current standard “certificates of insurance” are not worth much more than the paper on which they are written. Such certificates are merely informational and create no contract between your company and the insurance company, even when provided to you by the insurance company itself. In fact, right on the face of a standard certificate of liability insurance it is stated in capitalized and bolded text:
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