What Is a Certificate Holder on an Insurance Policy?
Learn the true role of a certificate holder on an insurance policy, understanding their purpose in verifying coverage and how they differ from other parties.
When businesses and individuals engage in various transactions, demonstrating financial responsibility often involves providing proof of insurance coverage. This verification helps establish trust and manage potential liabilities between parties. Understanding how this proof is communicated is important for many professional and contractual arrangements.
Understanding a Certificate Holder
A certificate holder is an individual or entity that receives documentation confirming another party’s insurance coverage. This status means they are given proof that an insurance policy is in place for the named insured. However, being a certificate holder does not extend any direct coverage under that insurance policy to them. They simply receive information about the policy’s existence.
For example, a landlord might request proof of liability insurance from a tenant, making the landlord the certificate holder. Similarly, a client hiring a contractor may ask for evidence of the contractor’s insurance. In both cases, the requesting party receives verification of coverage without becoming an insured party themselves.
The Certificate of Insurance Document
The proof of insurance provided to a certificate holder comes in the form of a Certificate of Insurance (COI). This is a standardized, one-page document issued by an insurance company or its authorized agent. It serves as a summary of the key details of an insurance policy, not the actual policy itself.
A COI includes the named insured’s name and address, the insurance company’s contact information, and the policy number. It also specifies the types of coverage in force, such as general liability, commercial auto, or workers’ compensation, along with their respective policy limits. The COI also displays the policy’s effective and expiration dates, providing a snapshot of coverage at a specific point in time.
Certificate Holder Versus Additional Insured
A common area of confusion arises when differentiating between a certificate holder and an additional insured. A certificate holder merely receives proof that another party has insurance; they do not gain any rights or coverage under that policy. Their status is informational, often entitling them only to notification if the policy is canceled or significantly altered.
In contrast, an additional insured is a party specifically added to an existing insurance policy through an endorsement, granting them direct coverage under that policy. This means the additional insured can receive protection and potentially file a claim under the named insured’s policy for liabilities arising from the named insured’s operations. For instance, a general contractor might require a subcontractor to name them as an additional insured, transferring some risk to the subcontractor’s policy.
Obtaining a Certificate of Insurance
The process of obtaining a Certificate of Insurance is straightforward. Typically, the party requiring proof of coverage, who will become the certificate holder, requests the COI from the named insured. The named insured then contacts their insurance agent or broker, who is responsible for generating and providing the document.
Many insurance providers offer online portals or direct contact methods for policyholders to request COIs, often allowing for quick generation and delivery. Once issued, the COI can be shared electronically or as a physical document with the requesting certificate holder.