Certificate Holder vs. Additional Insured: What Is the Difference?

A certificate holder obtains a copy of a certificate of insurance (with no other documentation) and has only an informational status. They have no rights under the policy. An additional insured, however, is added to the policy itself through an endorsement. They gain actual coverage, including defense and access to the named insured's limits for claims arising out of that insured's work. Therefore, if you are at risk enough to demand proof of insurance, you usually need to protect yourself with additional insured status also.

The two terms work in tandem nearly all of the time with almost every commercial lease or construction contract (thus why many buyers confuse them). In reality, many buyers assume that a certificate naming them as an additional insured proves they are covered. It does not. Certificates only report what the policy already states, therefore, if no endorsement had been created to add coverage for the buyer's interests, then the paper is describing coverage that doesn't exist.

First, if you have questions about how certificates are issued, please begin at certificate of insurance guide.

What is a certificate holder?

A certificate holder is simply the name of the individual or entity that receives a certificate of insurance, and this status provides a document, nothing more. When a landlord or general contractor requests to be named (to obtain confirmation), the named insured's broker will issue an ACORD 25 certificate listing the carrier(s), policy number(s), coverage type(s), limit(s) and effective date(s), along with the holder's name and address within the designated space. This can confirm that coverage did exist on the exact date that the certificate was provided, which is truly valuable for evaluating potential tenant(s), subcontractor(s) and vendor(s).

It just stops. The ACORD 25 in its plain language says it was issued as a matter of information only and provides no right(s) to the holder. Thus, the holder cannot submit a claim, demand a defense, or otherwise enforce the terms of this policy. If the policy cancels the day after issuance, the certificate does not change that.

In some jurisdictions, these disclaimers are codified in statute. As part of New York Insurance Law Section 502, a certificate cannot "amend, extend, or alter" coverage. It creates no additional rights to the extent that the express terms of the underlying policy do not provide for them.^[1] The State of New York Department of Financial Services has gone one step farther by restricting which certificate forms a party may even demand, such that if a landlord insists on certificate wording the policy does not contain, they would be making a request that is prohibited there.^[2]

What is an additional insured?

An additional insured is a person or organization with actual rights under someone else's policy because the policy itself was amended to include them. On a commercial general liability policy that happens through an additional insured endorsement, most commonly CG 20 10 for ongoing operations, scheduled by name or granted blanket to anyone the contract requires. The status delivers benefits no certificate can:

• A defense paid by the other party's insurer: defense costs are supplementary payments outside the limits of the standard CGL policy. Therefore a covered lawsuit gets defended without reducing your own coverage
• Access to the named insured's limits: their policy covers claims before yours does, especially when the noncontributory and primary clauses are used together
• Protection from subrogation: generally speaking carriers do not pursue recovery against insureds of their own
• A backup when contractual indemnity fails: if an anti-indemnity statute in a state voided the hold harmless clause, the additional insured status can still respond

Coverage has limitations. Endorsements such as CG 20 10 are applicable only to liability arising out of the named insured's work for you. The wording "ongoing operations" will end upon completion of the project. Where a contract needs protection for claims arising after project completion, it should also require CG 20 37. Our guide to additional insured endorsements provides an overview of all forms.

How do certificate holders and additional insureds compare?

The major difference between them is rights available to you through the policy, all other aspects such as cost and paperwork flow from that:

They are not mutually exclusive. If there is a reason to require additional insured status, that party is still listed as certificate holder, so it also receives the certificate documenting the endorsement and you hold both roles at once.

What contract mistakes should you avoid?

Most disputes over these two terms trace back to a handful of repeatable errors, starting with asking only for a certificate when you needed the endorsement. A contract that says "provide a certificate of insurance" gets a certificate and nothing else, so say "name us as additional insured on the CGL by endorsement" instead, and specify completed operations where the exposure survives the job. The upgrade is a policy change, so it runs through the named insured and their broker, and a blanket endorsement usually has to be triggered by a written contract signed before the work begins.

All paper work needs to be actual. Some certificates will state you have been added as an additional insured without the correct endorsement backing it up, and that version protects no one while creating exposures for errors and omissions on behalf of the agency issuing the certificate. According to the Independent Insurance Agents and Brokers of America approximately 1 of 25 E&O claims against agencies involve a certificate, and failure to add an additional insured correctly, or incorrectly identifying an additional insured, creates 36 percent of these.^[3] Therefore always obtain the endorsement document, review the schedule, and verify that your legal entity name is identical to what was listed on the schedule (because adding Smith Properties LLC as an additional insured does not necessarily insure Smith Properties Management Inc.)

Two traps round out the list. At each renewal of the policy be sure to verify that it is still in effect, as a midterm cancellation or a nonrenewal could result in you being no longer covered by this agreement. Do not confuse having "additional insured" status with "named insured" status. Although an additional insured has liability coverage related to the named insured's business activities, it has no coverage for its own independent actions. You will have coverage under your own policy for those same actions.

This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

The Bottom Line

When a certificate holder obtains a document, they have not obtained additional-insured status. An additional insured obtains coverage. A certificate is the receipt for obtaining insurance. The endorsement is the actual purchasing of that insurance and only by the endorsement can you actually tender a claim to the other party's insurance company. In addition to requiring proof of insurance through the certificate for risky relationships, include additional-insured language in the written contract so that once the endorsement is received (read the Schedule), you can verify that the endorsement shows your correct legal entity name prior to signing.