Certificates of insurance: what customers are really asking for
Additional insured, waiver of subrogation and primary and non-contributory, translated into what each one costs you.
A certificate of insurance is a one page summary proving coverage exists. It is not the policy and it grants nothing by itself. What matters is the endorsements behind the words on it.
The three requests you will see
- Additional insured. Extends your liability coverage to the customer for claims arising out of your work. This is a real endorsement with a real cost, and it must be added to the policy, not just typed on the certificate
- Waiver of subrogation. Your insurer gives up the right to recover from the customer even if the customer caused the loss. Common in construction contracts and usually available for a modest charge
- Primary and non-contributory. Your policy pays first and their policy does not share until yours is exhausted
Read the contract before you sign
The insurance requirements section is where the cost hides. A contract demanding five million dollars of auto liability, a waiver, additional insured status on a primary basis and thirty days notice of cancellation is asking for real money. Get the language to your agent during the bid, because after signing you are obligated whether or not it is affordable.
Notice of cancellation
Many contracts demand that the insurer notify the customer 30 days before cancellation. Most carriers will not agree to that language, and certificates now carry standard wording about it. If the customer insists, the fix is usually a negotiation rather than an endorsement.
What a certificate cannot do
- It cannot add coverage the policy does not have
- It cannot change policy terms, no matter what is typed in the description box
- It does not prove the policy is still in force today, only on the day it was issued
Practical habits
- Keep a current certificate on file for every subcontractor you hire, and check the expiration dates
- Ask for certificates naming your business as additional insured from anyone working for you
- Send renewal certificates automatically to recurring customers, before they ask
- Save a copy of every certificate you issue, so you know what you promised
We issue same day
Send the requirements and the customer's exact legal name and address and we will get the certificate out, usually within the hour. Call (956) 687-3334. Se habla español.
Common follow-up questions
Does adding an additional insured raise my rate?
Usually a small charge, and some policies include blanket additional insured status when required by written contract, which is the cheapest way to satisfy it.
Can I just type the wording on the certificate?
No. If the endorsement is not on the policy, the certificate is inaccurate and the customer is not actually covered. That is a serious problem for both sides.
What is a blanket endorsement?
One endorsement that automatically grants additional insured or waiver status to anyone you have agreed in writing to include. It saves paperwork for businesses issuing many certificates.
Want this looked at properly?
We are an independent agency in McAllen serving Hidalgo, Cameron and Starr counties. No cost to talk it through.
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