If you’re a builder or remodeler, you know to ask subcontractors for a Certificate of Liability Insurance before hiring them. But here’s what most contractors don’t realize—and what the insurance companies definitely do: that certificate alone probably doesn’t protect your business.
Insurance companies often issue certificates that look good on paper but leave you exposed if something goes wrong. If you don’t know the difference between a “Certificate Holder” and an “Additional Insured,” you could face serious and costly problems when you try to make a claim.
A Real-Life Example of What Can Go Wrong
One of my clients, a roofing company (let’s call them ABC Roofing), faced this exact situation. ABC Roofing contracted a subcontractor to install a new roof on an old apartment building. The subcontractor provided a Certificate of Liability Insurance naming ABC Roofing as the Certificate Holder. ABC Roofing thought they were covered.
What happened next? On the very first day, a section of the old roof collapsed (luckily no injuries). The building owner made a claim to their insurance for nearly $200,000 to replace the roof. Two years later, the owner’s insurer sued ABC Roofing to recover that amount.
ABC Roofing’s subcontractor’s insurer denied the claim—not because of the accident, but because ABC Roofing was only listed as a Certificate Holder, not as an Additional Insured.
Why Does That Matter?
Insurance companies know that a Certificate Holder is simply a party receiving the certificate—they are not automatically covered by the policy. An Additional Insured, however, is actually protected under the subcontractor’s insurance. Many contractors don’t know the difference, and insurance companies count on that confusion.
ABC Roofing then went to their own insurer for coverage, but their insurer denied the claim, saying the subcontractor’s insurance was responsible. Now, ABC Roofing faces expensive litigation—even though they thought they were protected all along.
What You Must Do to Protect Yourself
- Always require a written subcontractor agreement along with a valid Certificate of Liability Insurance.
- Confirm that your company is listed as an Additional Insured on the subcontractor’s insurance policy, not just as a Certificate Holder.
- Ensure your subcontractor agreements contain specific language to protect your interests in case of claims.
Don’t Wait Until It’s Too Late
If you haven’t had a construction law attorney review your contracts and insurance documents, now is the time to do it.
I’m here to help you review your contracts and certificates to make sure you’re truly protected. Don’t let a costly gap in coverage threaten your business. Call me at (717) 975-7799.
Protect Your Business Before You Need to
Relying solely on a Certificate of Liability Insurance without confirming you are named as an Additional Insured puts your company at significant risk. The difference could cost you hundreds of thousands of dollars and countless hours in litigation.
Take action today—review your contracts, demand the right insurance documentation, and get trusted legal advice to safeguard your business. The peace of mind you gain is worth far more than the cost of an attorney’s review.