Most contractors will hand you a certificate of insurance and claim you’re protected, but there’s a huge difference between being named insured, additional insured, or just a certificate holder. Named insured owns the policy and pays the premium, while additional insured gets coverage extended to it without paying a premium. Those with certificate holders only status get a piece of paper and zero protection against third-party liability.

The distinction matters because when contractors cause accidents and people get hurt, additional insured gets legal defense and claim payments, while certificate holders have to hire their own legal counsel and pay to defend claims resulting from activities of subcontractors, suppliers and vendors. The average construction dispute value globally reached $52.6 million in 2021, showing just how expensive this litigation can be.

CertFocus by Vertikal RMS automatically reviews COIs and required endorsements to confirm you have actual additional insured coverage instead of just worthless conditional language that has no value when you need it most.

What’s the Difference Between Additional Insured and Named Insured?

The named insured owns the insurance policy, while the additional insured gets coverage extended to it under the named insured’s policy. The named insured acquires the policy and pays for it, while the additional insured gets added to the policy later to extend the protection offered by the policy. The additional insured does not own or have any control over the policy.

Named insured parties have the authority to cancel the policy, change coverage limits, and make modifications, while additional insureds have no such authority.

Named Insured Definition and Rights

Named insured is the person or company that owns the insurance policy and is identified on the declaration page of the policy form. When you buy insurance, you become the named insured. This gives you complete control over everything about the policy, including:

• Coverage amounts
• What’s covered
• Who gets added
• When to cancel

You also get all the responsibilities that come with owning the policy. You pay all the premium and make all the decisions about coverage. If multiple people are named insureds on the same policy, then the first person listed usually gets the most authority over managing everything. You have direct communication rights with the insurance company and can contact them with questions about claims or coverage.

Additional Insured Definition and Protection

Additional insured gets extended coverage under someone else’s insurance policy without paying premiums or controlling the policy. You get added through special paperwork added to the named insured’s policy, called endorsements. The additional insured endorsement spells out exactly what protection you get and when you get it. This coverage usually only applies when claims come from the named insured’s work that involves your business.

You don’t pay any premium for getting additional insured protection, but you also don’t get to make any decisions about the policy. You can’t change coverage amounts or control how claims get handled. But the good news is that additional insureds get full defense coverage and can receive claim payments just as if they owned the policy themselves when covered incidents happen. Most business contracts require contractors to add you as an additional insured because it transfers their liability risks to their insurance carrier instead of you and your carrier.

Is a Certificate Holder the Same as an Additional Insured?

Certificate holder and additional insured are completely different things with different protection levels. These certificate of insurance basics determine whether you get actual coverage or just the evidence of coverage in the form of the COI. Being a certificate holder means someone gave you a copy of their insurance certificate, which is basically a piece of paper showing they have insurance. Being an additional insured means you’re actually covered under their policy and can file claims when a loss occurs.

The most important difference to keep in mind is that certificate holders get zero protection from the insurance policy. You’re just holding a document that proves someone else has coverage. This is huge when accidents happens and a loss occurs.

For example, let’s say a contractor’s faulty electrical work causes a fire that injures a customer in your building. The injured customer sues both you and the contractor for damages. If you’re just the certificate holder, then you have to defend the claim yourself with your own insurance coverage and lawyers. The contractor’s insurance will protect them, but they have no obligation to you. However, if you’re an additional insured on the contractor’s policy, their insurance will defend you in that lawsuit and pay any settlements or judgments against you.

What Does It Mean if I’m an Additional Insured on Someone’s Insurance Policy?

Being additional insured means you get extended liability coverage under someone else’s insurance policy without paying for it or owning the policy. You essentially become a beneficiary of their insurance when claims arise from their work or operations involving your business. This coverage kicks in when third parties sue you for incidents related to the policyholder’s activities.

The coverage scope usually includes defense costs and claim payments when lawsuits name both you and the policyholder for the same incident. For example, if a contractor’s work causes an accident and an injured party sues both of you, the contractor’s insurance defends and covers you as additional insured. However, this protection only applies to claims arising from the contractor’s work, not your own separate business activities.

You gain the right to file claims directly with their insurance company when incidents happen. You don’t have to wait for the policyholder to deal with things, as you can just contact the insurer directly and demand defense coverage when lawsuits hit. The insurance company has the same duty to defend you as it does its own policyholders for qualifying claims.

This protection saves you from using your own insurance for contractor-related incidents, especially if you also have primary and noncontributory coverage. If a contractor causes $500,000 in damage that leads to lawsuits against you, their insurance handles everything instead of your policy taking the hit. U.S. commercial liability costs totaled $347 billion in 2021, with small businesses bearing almost 50% of these costs despite representing a smaller portion of the economy, according to a study from the U.S. Chamber of Commerce Institute for Legal Reform. That makes it hard to overstate how important it is to have adequate protection.

Certificate Holder vs. Additional Insured: When You Need Each

Figuring out whether you need certificate holder or additional insured status depends on how risky the work is and how much trouble you could get into if something goes wrong. For simple, low-risk jobs, a certificate of insurance is usually good enough. For risky work that could get you sued, you’ll want additional insured protection so your contractor’s insurance covers you, too.

Think of it this way: if a contractor is just delivering products to your office, then certificate holder status works fine. If they’re doing construction work where someone could get hurt, then being added as an additional insured on the contractor’s general liability insurance policy can help you avoid getting hit with lawsuits. Just an average slip and fall claim costs $20,000, with some bodily injury claims reaching astronomical amounts that could devastate contractors and your business without proper coverage.

When To Request Certificate Holder Status

Certificate holder status works great for low-risk jobs where you mainly just want proof that the contractor has insurance. This covers things like office cleaning or basic maintenance, where not much can go wrong. You get a document showing they have coverage, which fulfills your contractual requirements and gives you peace of mind.

You’ll also use certificate holder status for routine business relationships where the contract says you need insurance proof, but the work isn’t that risky. Professional services, consultants, and suppliers tend to fall into this category as it relates to general liability insurance. Their work doesn’t create much risk for your business for bodily injury or property damage, so you just need to know they can handle their own problems.

When To Require Additional Insured Status

You need additional insured protection when contractor work is risky enough that you could get sued alongside them. Construction projects and anything involving heavy equipment or lots of people around definitely need additional insured coverage. When contractors working at your organization do things that could hurt someone, you want their insurance to protect you from lawsuits.

You should also demand additional insured status when your contractor insurance requirements make you responsible for what they do, or when local rules require it. Big commercial projects or government contracts usually fall here. This protection keeps contractor problems from impacting your insurance costs and gives you direct help with defense costs when lawsuits arise.

How Do I Know if I Should Be Additional Insured or Just Certificate Holder?

Choosing between certificate holder and additional insured status starts with honestly assessing how much risk the contractor’s work creates for your business. Look at what could go wrong and who might get sued if it does. High-risk activities like construction or anything involving heavy equipment almost always justify additional insured requirements. Low-risk work like consulting or basic office services is usually okay with just certificate holder verification.

Use this framework to decide whether you need certificate holder or additional insured status based on your specific situation and risk level. The higher the risk and complexity, the more you need additional insured protection instead of just certificate holder status.

Understanding Different Types of Named Insured

Not all named insured parties get the same rights and responsibilities under insurance policies. You might have multiple people listed as named insured on the same policy, but they don’t all get the same level of control. Some get more authority than others, and some get added later with different privileges than the original policyholder.

First Named Insured vs. Secondary Named Insured

First named insured is the person listed first on the policy who gets the most control and responsibility. This person is usually the one who bought the policy and pays the premiums. They get all the renewal notices and have direct authority to communicate with the insurance company. The first named insured also receives notice of cancellation when the insurance company elects to cancel the policy.

Secondary named insurance gets the same coverage protection but with less control over policy management. They can usually make some changes to the policy and receive coverage benefits, but the first named insured holds primary responsibility for major decisions. If you and your business partner both own a company, you might both be named insured, but whoever is listed first typically handles the insurance decisions.

Additional Named Insured vs. Additional Insured

Additional named insureds enjoy full policy rights and can make changes to coverage, while additional insureds only get protection without policy control. Additional named insured parties can modify the policy, receive all policy correspondence, and share responsibility for premium payments. They’re essentially co-owners of the policy.

Additional insureds just get protection when incidents happen, but they can’t change anything about the policy. They can’t cancel coverage or make decisions about claims. Additional named insurance is like being a co-owner of a car, while additional insured is like getting permission to drive it, but not being able to sell it. Your contracts should require that your company be added as an additional insured, not an additional named insured.

What Are the Risks of Adding Someone As an Additional Insured to My Policy?

Adding people or contractors as additional insureds to your policy creates a few risks that can cost you money and complicate your insurance coverage. While it helps your business relationships, it also means other companies can make claims against your insurance for incidents you didn’t cause. You need to understand what you’re getting into before you start adding contractors to your policy as additional insureds.

Here are the main problems you might run into when adding additional insured parties:

• Your insurance gets more expensive: Insurance companies usually charge extra fees for each additional insured endorsement, typically between $25 and $150 per year per contractor. Most importantly, your insurance premiums will go up if any of these contractors make claims on your insurance policy.
• Other companies’ problems become your problems: Additional insured contractors can file claims against your policy even when you had nothing to do with what went wrong. Their bad safety habits or risky business decisions could end up causing your insurance carrier to spend time and money investigating claims and could result in an increase in your insurance premiums.
• Everything gets more complicated: When multiple companies have coverage under different policies, it can be difficult to figure out who pays for what. Insurance companies might fight about which policy should handle a claim, which slows everything down and creates legal headaches nobody wants.
• More paperwork and tracking headaches: You have to keep track of all these endorsements, confirm they stay current, and update them when contracts change. CertFocus by Vertikal RMS automates this tracking by monitoring all your additional insured requirements and sending alerts when endorsements are deficient or need updates.

Additional Insured Coverage by Insurance Type

Not all insurance types offer additional insured protection in the same way, and some don’t offer it at all. General liability insurance provides the most common additional insured coverage that most contractors use. Professional liability and workers’ compensation have different rules and limitations that affect when and how you can get additional insured status.

Additional Insured on General Liability Insurance

General liability insurance provides the most straightforward additional insured coverage that protects you from third-party lawsuits related to the contractor’s work. And this protection is not particularly expensive, as contractors pay an average of $82–142 for agents or brokers to issue additional insured endorsements for general liability insurance, with 61% of construction businesses paying less than $100 per endorsement, according to Insureon.

This coverage kicks in when someone gets injured or property gets damaged because of the contractor’s activities, and they sue both you and the contractor. The contractor’s general liability insurance will defend you and pay settlements or judgments when you’re named in these lawsuits.

Furthermore, there are different types of general liability additional insured endorsements that provide varying levels of protection:

• CG 20 10 (Ongoing Operations): Covers you only while the contractor is actively performing work, but protection ends when the job is complete.
• CG 20 37 (Completed Operations): Protects you after the contractor finishes their work, covering claims that arise from defects or problems discovered later.
• CG 20 33 (Ongoing and Completed Operations): Provides the broadest protection by covering you both during the work and after completion.

Additional Insured on Professional Liability and E&O Insurance

Professional liability and errors and omissions insurance almost never offer additional insured coverage because these policies protect against professional mistakes rather than general accidents. When additional insured coverage is available on professional liability policies, it usually only applies to very specific situations where you might get sued for the professional’s advice or services. Most professional liability policies exclude additional insured coverage entirely.

Industries like architecture, engineering, and consulting sometimes provide limited additional insured coverage for clients, but the protection is much narrower than that of additional insured status on general liability coverage. The coverage usually only applies when you get sued specifically for the professional’s errors or omissions in their work for you.

Additional Insured on Workers’ Compensation

Workers’ compensation insurance traditionally doesn’t offer additional insured coverage because it’s designed to cover the policyholder’s own employees, not outside parties. However, some states allow limited additional insured coverage on workers’ compensation policies when you might be held responsible for injuries to the contractor’s employees. This coverage protects you when injured workers sue you directly instead of just filing workers’ compensation claims.

Additional Insured vs. Additional Interest: Key Differences

Additional insureds get actual liability coverage under someone else’s policy, while additional interest just gets notified about policy changes without any coverage benefits. You want additional insured status when you need protection from lawsuits, but additional interest works fine when you just need to know if someone’s insurance gets canceled.

These are the main differences between additional insured and additional interest:

Common Additional Insured Mistakes To Avoid

Many businesses think they have additional insured protection when they actually don’t because of common mistakes in how endorsements get set up or verified. These errors can go unnoticed until after claims happen, which would leave companies exposed to lawsuits they thought were covered. Construction defect litigation is expected to rise in 2025 due to the ongoing skilled labor shortages, according to a Seyfarth Shaw report, so it pays to be well-protected.

Avoid these mistakes when confirming you have additional insurance status:

• Accepting vague blanket wording: Generic certificate language like “additional insured as required by contract” provides no actual protection because it doesn’t confirm specific endorsements exist on the policy. In some instances, reliance on additional insured status by a blanket policy endorsement is deemed acceptable to alleviate the amount of effort required for validating coverage
• Missing coverage for completed operations: Many additional insured endorsements only cover ongoing work, leaving you unprotected from claims that arise after the contractor finishes the project.
• Wrong endorsement timing: Adding additional insured status after work begins or claims are made provides no protection because endorsements only cover incidents that happen after the additional insured status has been established.
• Failing to verify endorsement existence: Certificates can show additional insured status without the actual endorsement being added to the policy, creating a false sense of security.
• Incorrect certificate holder information: Small errors in company names or addresses on endorsements can void protection when claims are filed.
• Assuming all policies include additional insured: Some insurance types like professional liability rarely offer additional insured coverage, but contractors might not realize this limitation.

Additional Insured Wording on Certificate of Insurance

Certificate descriptions must contain specific additional insured language that confirms that actual endorsements exist on the policy rather than just indicating potential coverage. Vague or conditional language creates dangerous coverage gaps that leave you unprotected when claims happen. Verify the following language when reviewing your additional insured coverage:

• Proper additional insured language: Look for specific statements like “Additional Insured per endorsement” or “Additional Insured as respects operations performed for the certificate holder” that confirm active coverage. Many contracts also include waiver of subrogation requirements alongside additional insured status.
• Required certificate elements: Verify that additional insured language names your company specifically and references the coverage types where endorsements apply.
• Dangerous conditional language: Avoid certificates stating “additional insured if required by contract” or “additional insured may apply” because these phrases indicate that the endorsements might not actually exist.
• Coverage scope verification: Check that descriptions specify whether protection applies to ongoing operations, completed operations, or both types of coverage.
• Endorsement from references: The best certificates include specific endorsement form numbers like “CG 20 10” or “CG 20 37” that confirm exactly which additional insured coverage applies.

What Are Insurance Endorsements and How Do They Work?

Insurance endorsements are the actual documents that modify policy terms and create the coverage changes certificates claim to show. Certificates summarize what coverage exists, but endorsements are the formal amendments that actually add or remove protection. Without proper endorsements attached to the policy, certificate notations about additional insured status or waivers of subrogation provide zero enforceable rights when claims occur.

Insurance Endorsement Definition

An insurance endorsement is a written amendment to an insurance policy that changes the policy’s terms, coverage, or beneficiaries. These documents get called “riders” or “policy amendments” and become permanent parts of the insurance contract once added.

It’s what actually implements coverage changes rather than just describing them. When a certificate states “Additional Insured per endorsement,” the endorsement form like CG 20 10 or CG 20 37 creates the actual coverage. The certificate just confirms this endorsement exists.

Insurance policy endorsements override standard policy language when conflicts pop up. This means endorsements can override exclusions, add new coverage, or restrict protections that would otherwise apply under the standard policy. Endorsements become part of the insurance contract once issued by the insurance company and are listed on or attached to the policy documentation.

Common Types of Insurance Endorsements

Different endorsements serve specific purposes in modifying commercial insurance policies:

• Additional insured endorsements: Forms like CG 20 10, CG 20 37, and CG 20 33 extend the named insured’s liability coverage to third parties for claims arising from the policyholder’s work. CG 20 10 covers ongoing operations only, CG 20 37 provides completed operations protection, and CG 20 33 provides blanket coverage for ongoing operations, automatically adding anyone required by written contract. These endorsements spell out exactly when and how the additional insured gets protected.
• Waiver of subrogation endorsements: Stop the insurance company from pursuing the party named in the waiver after paying claims. For example, if a contractor damages your property and your property insurer pays you, your insurer normally could sue the contractor to recover what they paid. A waiver of subrogation endorsement gives up that right, protecting the contractor from being sued by your insurer.
• Primary and non-contributory endorsements: Designate which insurance policy pays claims first when multiple policies could respond to the same loss. Primary endorsements make the policy respond before other available insurance, while non-contributory provisions prevent the insurer from seeking contribution from other policies. These stop coverage disputes between multiple insurance companies.
• Blanket additional insured endorsements: Automatically add as additional insureds anyone the named insured agrees to add through written contracts, without requiring separate endorsements naming each party. Forms like CG 20 33 and CG 20 38 provide blanket coverage, though both cover ongoing operations only. Completed operations still requires a CG 20 37.
• Hired and non-owned auto endorsements: Extend commercial auto liability coverage to vehicles the business doesn’t own but uses for work, including employee personal vehicles or rental cars. This fills gaps when standard auto policies don’t cover these situations.

How Endorsements Modify Insurance Policies

Endorsements change policies by adding coverage, removing coverage, or clarifying how existing terms apply to specific situations. When an endorsement contradicts standard policy language, the endorsement wins because it represents the specific agreement between the insured and insurer.

Adding an additional insured endorsement extends liability coverage to third parties who aren’t named on the policy. The base commercial general liability policy only covers the named insured. The CG 20 10 endorsement amends the “Who Is An Insured” section to include additional parties, but only for liability from the named insured’s ongoing operations performed for those additional insureds.

Endorsements removing coverage work by adding exclusions or restrictions to standard policy grants. A total pollution exclusion endorsement removes coverage for pollution-related claims that might otherwise be covered. These restrictive endorsements often show up on policies for high-risk industries where insurers want to limit specific exposures.

Endorsements stick with policies through renewal periods unless specifically removed by the insurance company or requested by the policyholder. When policies renew annually, endorsements typically carry forward automatically. However, insurance companies can remove or modify endorsements at renewal, which is why annual verification of required endorsements matters.

Why Certificate Notations Don’t Replace Actual Endorsements

Certificates of insurance display summary information about policies but create no enforceable coverage rights. The standard ACORD certificate disclaimer explicitly states: “This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not affirmatively or negatively amend, extend or alter the coverage afforded by the policies below.”

Certificate notations claiming “Additional Insured per contract” or “Waiver of Subrogation as required by written contract” mean nothing without actual endorsement forms attached to the underlying policy. Insurance companies have no obligation to honor these certificate notations if the endorsements don’t actually exist.

Here’s how this creates problems:

A general contractor receives a certificate from a subcontractor showing “Additional Insured – CG 20 10 and CG 20 37.” The certificate appears to confirm complete additional insured protection for both ongoing and completed operations. Six months after the subcontractor finishes work, defects cause property damage. The injured property owner sues both the general contractor and the subcontractor.

The general contractor files a claim as an additional insured on the subcontractor’s policy. The insurance company investigates and discovers only a CG 20 10 endorsement exists on the actual policy. No CG 20 37 completed operations endorsement was ever added, despite what the certificate stated. The insurance company denies the general contractor’s claim because the work finished six months ago, and CG 20 10 only covers ongoing operations.

The general contractor assumed they had protection based on the certificate notation, but the missing endorsement left them exposed. The certificate’s disclaimer protects the insurance company from liability for the incorrect information.

Proper verification requires requesting copies of actual endorsement forms, not just certificates claiming endorsements exist. COI endorsement verification should include reviewing the policy declarations page showing all attached endorsements and confirming the endorsement form numbers match what contracts require.

How CertFocus by Vertikal RMS Manages Additional Insured Verification

CertFocus by Vertikal RMS automates the complex process of verifying additional insured status across all your contractor relationships through AI-powered certificate analysis and continuous compliance monitoring. The platform eliminates the need to manually review certificates by automatically detecting additional insured language, verifying endorsement accuracy, and tracking compliance requirements across different insurance coverage types.

This level of automation and precision reflects Vertikal RMS’s commitment to customer success:

Automated Additional Insured Detection

CertFocus by Vertikal RMS uses Hawk-I artificial intelligence to scan incoming certificates and identify additional insured language, flagging documents that lack required endorsements or contain vague wording. The AI system reads complex insurance terminology and recognizes valid additional insured provisions even when different insurance companies use varying language or formatting. This prevents false approvals or certificates that appear to show additional insured status without actual endorsement backing.

Compliance Tracking Across Insurance Types

CertFocus by Vertikal RMS monitors additional insured requirements across multiple insurance types simultaneously, confirming that contractors are providing complete protection rather than partial coverage. The system tracks general liability, auto liability, and other coverage types that require additional insured endorsements. This comprehensive monitoring prevents the common problem of assuming that complete coverage exists when only some policies include additional insured status.

The platform manages renewal tracking and expiration monitoring for all required coverages, sending automated alerts before coverage lapses. CertFocus by Vertikal RMS maintains detailed records of coverage effective dates and policy renewal cycles to prevent coverage gaps that could expose your business to liability risks.

Cost Impact of Additional Insured Endorsements

Some insurance companies charge anywhere from $25 to $150 per additional insured endorsement per year, with costs varying based on coverage types and risk levels. Professional liability and specialty coverages usually cost more for additional insured endorsements than standard general liability policies, but are rarely required. These fees represent a small fraction of total insurance costs but can add up when multiple contractors require endorsements.

The real cost comes from claims made by additional insured parties that affect your loss history and future premium rates. The administrative costs for managing multiple endorsements and verifying compliance can also take up a significant amount of time without automated systems. CertFocus by Vertikal RMS reduces these administrative costs by automating endorsement tracking and verification processes.

Frequently Asked Questions About Additional Insured Status