Additional Insured or Waiver of Subrogation

My Customer Service Representative (CSR) and I see a ton of Certificate of Insurance requests come to us. Many of our clients do not understand what a Certificate Holder is or what being an additional insured means.  When requesting a Certificate of insurance for Workers Compensation many of my clients do not understand why an Additional Insured cannot be named on a Work Comp Policy.  Well I am going to shed some light on some common terms that will help you through the process of obtaining a certificate of insurance from your insurance agency.

Certificate of Insurance

Certificate of Insurance: A document issued by an insurance company or broker that is used to verify insurance coverage under specific conditions grated to listed individuals. More specifically the document lists the effective date of the policy, the type of insurance coverage purchased, and the limits of liability or dollar amount of coverage.

Additional Insured: A type of status associated with General Liability Policies that Provides coverage to other individuals or a group that were not initially named. After endorsement, the additional insured will then be protected under the named insurer’s policy and can file a claim in the event that they are sued.Additional Insured is available on General Liability, Auto Liability and Umbrella Liability.

Certificate Holder: A certificate holder is an individual or entity that is named on the certificate of insurance in order to be notified in the event that any coverage on the certificate is cancelled prior to the renewal date. No coverage protection under the contractor’s policies is provided to a Certificate Holder.

Waiver of Subrogation: A waiver of subrogation means that the insurance carrier agrees to relinquish any right to recover damages if it is determined in the course of investigating the claim that the client or one of the client’s employees was responsible for the loss. An insurance carrier may reserve the “right of subrogation” in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party.

Waiver of Subrogation is available on General Liability, Auto Liability, Umbrella Liability and Workers Compensation.

A waiver of subrogation provision prevents the insurance company (who steps into the shoes of the insured after it pays a loss) from suing the other party to the contract – which likely caused the loss.  Moreover, waiver of subrogation provisions found in contracts are generally upheld by Courts.

When a contractor works on another person’s property, there are risks involved. Contractors can sometimes damage personal property or may even be injured while performing the work. Companies and individuals that hire contractors want to be certain that they will not be held liable for injuries, damages or substandard work. For this reason, they will frequently request to see a certificate of insurance.

Client’s call and request an additional insured to be added to a work comp policy that however cannot be done. As stated above an additional insured is naming someone else on your policy and a Work Comp policy is written to cover the injured employees not another company.  The alternative to that would be requesting a Waiver of Subrogation.  If you are a sub contractor and you are working with a larger company that is requesting a Waiver of Subrogation make sure you understand what you are being asked to waive.

If your company hires subcontractors, it is extremely important that you get a certificate of insurance from each one you work with. Even if you trust your subcontractors – for example, if you have worked with these contractors in the past and knew them to have insurance at the time – you should submit a certificate of insurance request each time you hire them onto a new job. Doing so can prevent a scenario where you inadvertently take on the risks associated with the work your subcontractors perform.