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A certificate holder merely receives proof that your insurance exists; the certificate gives them no rights under your policy. An additional insured is actually added to your policy by endorsement and can claim coverage under it, typically for liability arising from your work for them. Contracts that say additional insured mean the endorsement, and handing over a certificate without the endorsement behind it is one of the most common, and most expensive, compliance failures in commercial contracting.
When a general contractor hires a subcontractor, or a landlord leases to a tenant, they are exposed to claims arising from that party's work or occupancy. Additional insured status moves that exposure onto the responsible party's policy: the injured worker who sues the GC is defended by the subcontractor's carrier, because the GC is an insured under the sub's policy for that work. It is risk transfer made real, and it is why sophisticated contracts specify not just the status but the exact endorsement forms and editions that must provide it.
Not all additional insured endorsements are equal. Some cover ongoing operations only, leaving the counterparty bare for claims after the work completes, which is precisely when construction-defect claims arrive. Contracts often demand completed-operations AI, primary and non-contributory wording, meaning your policy pays before theirs and without contribution, and a waiver of subrogation, preventing your carrier from suing them to recover. Blanket AI endorsements cover counterparties when a written contract requires it, but the blanket wording must actually match what the contract demands. Close is not compliant.
Treat certificates as outputs of a managed process, not paperwork. Keep a register of what each contract requires, verify your endorsements actually satisfy those requirements before signing, and issue certificates that accurately reflect the coverage rather than what the requester hoped to see. On the receiving side, the discipline is harsher: collect certificates and endorsement copies from every subcontractor, track expirations, and stop payment on lapses, because their uninsured claim becomes your insured one, on your loss runs, at your renewal.
Almost none. It is notice that a policy existed on the day the certificate was issued, often with a disclaimer that the certificate confers no rights. Protection comes from the additional insured endorsement on the actual policy, never the certificate alone.
That the indemnitor's policy pays first and does not ask the counterparty's own insurance to share the loss. Contracts demand it so their insurance stays untouched, and their loss history stays clean, when your work causes the claim.
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