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When a third party asks for proof of insurance for your business, they are issued a ‘certificate of insurance’. Often times they will ask to be included as an additional insured, the certificate is used to show that they have been added as additional insured to your policy. Sometimes the third party will request that the certificate be limited to a certain job or date. This restricts coverage for the time or job that is listed on the certificate. If there is no restriction the coverage for the additional insured will be for the policy period.
The coverage for the additional insured will respond only if the additional insured is brought into a lawsuit with the policy holder. It will not respond to a law suit where they are named individually and the policy holder is not named. The policy holder is referred to as the ‘Named Insured’. The certificate holder is described as an ‘Additional Insured’.
It is very important that you have the proper legal name of the policy holder on the policy as the named insured. You need to list the Corporation or LLC and any DBA’s. If the policy holder is a sole proprietor or partnership, you need to list each person’s name. You do not need to list individuals names if the legal entity is a corporation or LLC.
Please note: J. Michael Low is a former AZ Director of Insurance, and is the founding partner and an attorney with Low & Childers, PC of Phoenix, AZ. He is still practicing full time and has agreed to help Low & Johnson on certain coverage and claims issues relating to insurance. He is not issuing legal opinions or legal advice on behalf of Low & Childers. Mr. Low is a licensed property and casualty producer in the state of Arizona.
Any questions please give me a call or e-mail. Also, we keep the insurance tips newsletter an various topical insurance issued posted on the Low & Johnson web site www.lowjohnson.com.