Navigating Certificate Holder Updates: A Guide To Changing Insurance Information

A certificate holder is a person or organisation that holds a certificate of insurance (COI) as evidence of insurance coverage maintained by another entity. They are usually listed on the certificate in a designated box, but if there is not enough space, they may be noted in the description of operations or on an additional remarks page. The certificate holder is not the policyholder and does not enjoy any benefits or coverage under the policy unless they are also named as an additional insured. Being a certificate holder is often a formality, and they are not entitled to any benefits from the insurance policy. However, they have the right to be informed and may receive advance notice if the policyholder decides to cancel the policy.

Understanding the difference between a certificate holder and an additional insured

A certificate holder is a third party that may be named on a Certificate of Insurance (COI). They hold proof of insurance from insured parties they are working with. A COI is a document that proves an insurance policy exists. It is a concise verification of coverage, including details such as the insurer's information, policy number, effective dates, policy limits, and specific coverages. It is important to note that being a certificate holder does not provide any protection or coverage under the policy. The certificate holder only holds the certificate to assure the policyholder they are working with has their own coverage.

An additional insured, on the other hand, is someone who has coverage extended to them through the "named insured's" policy. They are covered under the policy on a COI but were not originally included under the policy; they were added through an endorsement. An additional insured is entitled to the same coverage benefits as the policyholder and can make claims under the policy. This is particularly important in industries where partnerships and shared responsibilities require more extensive coverage than what the main policyholder has.

For example, consider a general contractor hiring an electrical contractor to handle electrical wiring for an office remodeling project. The general contractor may wish to be listed on the electrical contractor's policy as an additional insured. In this case, the general contractor would be covered by the electrical contractor's policy and could file a claim if, for instance, a faulty electrical outlet installed by the electrical contractor caused a fire and substantial property damage.

To summarise, the key difference between a certificate holder and an additional insured is that a certificate holder only holds proof of insurance, while an additional insured has coverage and can make claims under the policy. It is important to understand these distinctions to ensure your company has adequate protection from claims and that you are covered in case of any incidents.

The benefits of certificate holder status

A certificate holder is a third party that may be named on a Certificate of Insurance (COI). While a certificate holder does not enjoy any coverage or protection under the policy, there are several benefits to attaining this status. Here are some key advantages:

• Proof of Insurance: Certificate holders possess a COI, which serves as proof that the insured has the necessary coverage. This is especially important when working with third-party vendors to ensure they have adequate insurance and reduce potential risks.
• Notification of Changes: Certificate holders are typically notified of any changes or cancellations to the insured's policy. This allows them to stay informed and take appropriate actions if needed.
• Improved Risk Management: By requesting COIs, certificate holders can protect themselves from potential claims. In the event of an accident or damage caused by the insured, the certificate holder can ensure that the insured's policy will cover the costs, reducing their own liability.
• Peace of Mind: Being a certificate holder provides peace of mind, especially in situations where there is a risk of liability claims, such as slip-and-fall accidents on job sites.
• Simplified Compliance: In certain industries, such as commercial real estate, being a certificate holder is a standard formality. Listing a company like Jones as a certificate holder can simplify the auditing process and reduce the amount of physical mail received.
• Protection from Underinsured Claims: Tools like myCOI help certificate holders protect their businesses from the risks of underinsured claims, costly litigation, and failed audits.

The benefits of additional insured status

An additional insured is a person or entity added to an insurance policy by the policyholder or named insured. This status provides several benefits and protections for organizations. Here are some advantages of additional insured status:

• Protection in the event of a lawsuit: Additional insured status extends coverage to people not specifically named in the original policy. That is, the policy will pay out for claims and damages related to the additional insured in the case that the additional insured are also liable.
• Prohibits people from suing for damages they caused: Job sites can be hazardous, and an additional insured endorsement adds extra coverage for unpredictable circumstances. A person responsible for any damage to your business can't then cause further issues by making a claim against you for any effect the damage they caused had on them.
• Reduces the cost of premiums: In the course of a single job, you may have to cover many different third parties or subcontractors. Instead of listing each person separately, a "blanket additional insured" clause covers all third parties without listing them individually, which is far more cost-effective.
• Avoids expensive litigation costs: If your business is sued for a covered claim, the policy will cover the costs of your defence, including attorney's fees and related defence costs.
• No policy limit on coverage type: Whether the third party is affected by property damage, personal damages, bodily injuries, or medical bills, a blanket additional insured coverage is not limited by the type of damage.

While there are benefits to additional insured status, it's important to note that there are also limitations to this coverage. For example, additional insureds cannot be added to a professional liability insurance policy, and there may be restrictions on the types of liability covered.

How to request a certificate of insurance from a vendor

A Certificate of Insurance (COI) is a standardised document that provides proof of a vendor's insurance coverage. It is issued by the vendor's insurance company and contains essential information such as the name of the insurer and insured, the type of insurance coverage, policy numbers, effective dates, endorsements, and limits.

Requesting a COI from a vendor is a crucial step in safeguarding your business from potential liability. Here are the steps to request a COI:

• Understand when you need a COI: Request a COI from any vendor entering your business premises or project site, whose work might generate risk. This requirement can be specified in the vendor application, Request for Proposal (RFP), agreement, or contract.
• Use a sample letter or form: If you frequently work with vendors, having a template can save time and ensure your request includes all necessary details.
• Specify your requirements: Clearly outline the types of coverage, policy limits, and any additional insured endorsements you require. Ensure that your vendors can meet these requirements before they begin work.
• Set a deadline: Specify a deadline for the vendor to provide the COI, so you have the necessary documentation before work commences.
• Verify the COI: Once you receive the COI, carefully review it to confirm that it meets your specified requirements. Contact the vendor's insurance provider if you have any questions or concerns.
• Maintain a record: Keep a record of all the COIs you receive for compliance and easy access to important insurance information.

Additionally, it is important to understand that insurance requirements may vary by state, so it is recommended to consult with your insurance broker to stay informed about state-specific requirements.

How to change the certificate holder on a certificate of insurance

A certificate holder is a third party that may be named on a Certificate of Insurance (COI). They are the entity that is provided with a certificate of insurance as evidence of the insurance maintained by another entity. The certificate holder is usually listed in the designated "Certificate Holder" box at the bottom left of the certificate. However, if there is no space, the broker may note the certificate holder in the "Description of Operations" or on an "Additional Remarks" page.

The certificate holder is not the policyholder and does not enjoy any protection or coverage under the policy. They are simply the person or organisation that holds the certificate as proof of the policyholder's insurance coverage. The policyholder is the person who purchases the insurance policy and is often referred to as the “named insured”. They are responsible for paying the insurance premiums and can make adjustments or changes to the policy.

Being a certificate holder on a vendor's certificate of insurance is often a formality. While it provides proof of insurance, it does not give the certificate holder the ability to make a claim on the policy. The certificate holder may, however, receive advance written notice if the policyholder decides to cancel the policy, although this rarely happens in practice.

To change the certificate holder on a certificate of insurance, the policyholder would need to contact their insurance provider and request to update the designated certificate holder. The process may vary depending on the insurance company, but it typically involves providing the necessary details of the new certificate holder, such as their name and contact information. It is important to note that changing the certificate holder does not alter the terms or coverage of the insurance policy.

Frequently asked questions