How Do You Name An Additional Insured On An Insurance Policy?

The difference between an “insured,” or the person who purchases coverage from an insurer, and an “additional insured,” or a third party added to a policy, can be a little confusing to understand. To help, here are some truths about additional insureds:

• They are not the same as an “insured” because they didn’t purchase the policy and cannot alter its coverage.
• Once added to a policy, however, they’ll receive the same coverage as its owner and can use it in the event of a claim or lawsuit.
• They are not responsible for any of the insurance payments or premiums – they just benefit from the coverage.

Additionally, a “certificate holder” is a person or organization that holds the certificate of insurance (COI) as evidence of coverage in a situation. In almost every case, a company will want to be listed as both an additional insured (receiving coverage in the event of a claim) and the certificate holder (able to verify all coverage and communication surrounding a COI).

In this blog, we’ll cover the pros and cons of additional insureds and walk through the process for naming both additional insureds and certificate holders to your insurance policy.

Pros and Cons of Adding an Additional Insured to an Insurance Policy

When a person or business looks for insurance coverage, they need to consider the many potential risks that may arise from their operations. In some cases, they’ll need to add another party to the policy: an additional insured. Let’s quickly cover some of the pros and cons of adding an additional insured to your policy.

Pros of Adding an Additional Insured

• Adding an additional insured to a policy provides an extra layer of protection for the named party, covering them for certain risks and liabilities and helping mitigate their exposure to loss and damages.
• In some circumstances, adding an additional insured may be required by law or contract. For example, it’s common in construction for policyholders to be required to extend their insurance coverage to other entities.
• It can be cost-effective – and is certainly cheaper than an additional insured obtaining a separate insurance policy to cover themselves.

Cons of Adding an Additional Insured

• Adding an additional insured will almost surely result in higher premiums for the policyholder (usually a vendor or subcontractor) due to the increased liability associated with covering more parties. 
• Coverage disputes might come up in the process of adding an additional insured; for example, if there is disagreement surrounding the scope or amount of coverage.

How To Name Additional Insured Endorsement

Now that you know some benefits and burdens of naming an additional insured on your policy, let’s walk through the steps to do so. This process may differ depending on the type of policy and insurance company you work with, but typically, here’s how to go about adding an additional insured to your policy.

1. Determine who needs to be named as an additional insured. Consider the person(s) or organization(s) involved in your operations that could be held liable for damages or losses.
2. Review the insurance policy. Examine your current policy and confirm that it allows for an additional insured endorsement.
3. Provide information about the additional insured. You’ll need to provide some information about the person or organization you’re adding, such as their name, address, and relationship to you, the policyholder. 
4. Agree on the terms. You and the additional insured will need to come to an agreement about the scope of coverage and limits of liability your policy will provide, as well as the duration of the coverage. 
5. Pay any additional premiums. Naming an additional insured to your policy may result in higher premiums. You’ll need to pay any additional amounts owed in order to validate the coverage.

How To Add Certificate Holder To Insurance

As previously mentioned, a certificate holder is a third party who can verify the existence of insurance coverage by being the “holder” of the COI. They do not have protections under the policy like the policyholder and additional insured do, but they can use the certificate to confirm who has coverage. The certificate holder also receives a copy of every claim made against the policy and all correspondence between the insurer and the policyholder.

To add a certificate holder to your insurance, the process generally goes as follows:

1. Determine who needs to be named as a certificate holder. Consider to whom the certificate needs to be provided as evidence of insurance (e.g., a client or contractor).
2. Contact the insurance company or agent. You’ll need to request the COI from your insurance company or agent. 
3. Provide the necessary information. Ensure you have all of the information required about the certificate holder as well as the policy itself. 
4. Agree on the terms. Come to an agreement with the certificate holder about the terms terms of the coverage that are to be reflected on the COI.
5. Receive the certificate. The insurance company will then deliver the COI to the certificate holder either electronically or via mail, and from there, they can use it to verify the existence of insurance coverage.

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