Many questions often come up in regards to certificate of insurance. Below is list of common terms and their definitions along with some frequently asked questions.
Who is the Insured? The insured (also known as the named insured) is the person or company that has purchased the policy or policies in question.
Who is the Certificate holder? The certificate holder is generally the person or company requesting proof of insurance. This may be a general contractor or property manager that the insured is doing work or providing services for.
What is an Additional insured? An additional insured is a person or organization which is provided limited coverage, by endorsement to a general liability policy purchased by another person or organization (i.e. the insured or named insured). There are different types of additional insured coverage that can be endorsed onto a policy. With contractors, we most often see requests to add additional insured endorsements for ongoing operations and/or completed operations (see definitions below).
Ongoing operations: This is the work you are currently doing, or work that has not yet been completed.
Completed operations: This is work that has been completed or put to its intended use.
What is a Waiver of subrogation? Normally an insurance company has the right to try to recover money paid on a claim if a third party is responsible for the claim (called subrogation). A waiver of subrogation means they waive that right of recovery. Certificate holders may request a waiver of subrogation on general liability, auto liability or workers compensation policies.
What does Primary & Noncontributory mean? If your policy contains primary and noncontributory wording, your policy must pay for a covered loss before any other applicable policy (primary) and without seeking contribution from any other policy (noncontributory).
What does Per Project aggregate mean? Commercial general liability policies all have a limit of liability which is the most the policy will pay on behalf of the insured. A per project aggregate limit extends the limit to apply separately to each construction project.
Why do we ask for description of job, total cost, total payroll, etc.? If it is necessary to add an additional insured endorsement to the policy, the insurance company will need to know what work the insured is doing and how large the job is in order to rate for the exposure to add the endorsement.
Why do we ask if project involves tract homes or multi-family dwellings? Many commercial insurance policies exclude coverage for these types of operations.