What Is An Insured Endorsement On A Certificate Of Insurance And Do You Need It?

It’s rare that a business works alone without the help of another business. It doesn’t matter what type of business it is because many scenarios call for an insured endorsement on a certificate of insurance.

For example: A contractor builds a new home, but they also use subcontractors for the labor and material. Another example is a retailer who wants to add an additional insured on the insurance programs of the manufacturers of the products that are sold. In some cases, a mortgagee will add this to ensure coverage of damage left by tenants.

What Is An Insured Endorsement On A Certificate Of Insurance?

Basically, an insured endorsement on a certificate of insurance is where one party will add the other party as an “additional insured” on their commercial liability insurance policy. In the case where your company is added, the other company is protecting themselves against liability done by someone under the umbrella of your own company. By adding another company to your own policy with an insured endorsement on a certificate of insurance, you are protecting them from negligence from your own company.

What Is The Process?

To have additional insured status is a formal process that is done through a certificate and an endorsement. Your insurance agent is capable of taking care of the formal process, but there is also something you need to do. It is important to be certain that the business that claims to have added you has actually done so. In order to be sure, you have to see the actual endorsement; seeing the proof of insurance is not enough.

Another thing to keep in mind is that having an additional insured doesn’t negate the fact that an additional insured may need their own insurance. Those businesses must rely on their own insurance policy. For instance, you may add a subcontracting company, but this company will still rely on their own insurance for their needs.

Simply put, this insured endorsement on a certificate of insurance is not their insurance, nor does it cover their own problems. It simply covers you if they have negligence at your work site.

The Four Principles Of Verifying An Insured Endorsement

There are four things to keep in mind when conducting this type of business and each of them are integral to your success.

1. Ask and Verify. Always verify the other company’s insurance to make sure that they have liability. It’s never safe to assume that they do—instead, ask for their certificate of insurance so that there are no questions later on.
2. Always Review. Your own insurance agent and legal representative need to be present to review the additional insured endorsement from the other company. Request that you receive it, then have it reviewed by the experts.
3. Look for Holes. Before any contract commences, go over your liability policy and know exactly what is covered with the additional insured coverage. It is easier to find holes or mistakes and fix them before the paperwork is signed rather than to wait until the work starts and then try to change a contract.
4. Read and Know. Make sure that you read each and every contract requirement and don’t put your own company in jeopardy by writing the contract requirements. You do not want to end up agreeing to add additional insureds. Know what they are asking and know exactly what you are asking as well.

Learning about insured endorsements on certificates of insurance doesn’t have to be complicated when you have the experts to help you.