Roofer subcontractorAs a business owner, you have a lot of responsibilities in the day-to-day business handling such as appointments, employees, schedules, and even the insurance that protects it. In order to protect your business and assets, you must prioritize the insurance that covers it and knowing some differences between certain insurance terms is vital to the comprehension of your business insurance needs. Regarding your business, do you know how the difference between Certificate of Insurance and Additional Insured can impact your business?

How Certificate of Insurance is Used for Business

A certificate of insurance is basically proof that the business has a current business insurance policy in effect. For example, imagine that you are having some trees cut down on your property and hire several workers, who claim to have insurance, perform the job. While cutting down one of the larger trees, one worker misjudges how close the tree is to your property and suddenly the tree goes through your roof causing significant damages.

After the fact, you ask to visually inspect the insurance the workers claimed to have, only to find out that there was no insurance coverage at all. Now what? As you may imagine, you will be responsible since the negligent party (tree business) failed to carry insurance. Lesson learned…always ask for proof of insurance BEFORE the job begins or you may suffer some serious financial consequences.

Who is An Additional Insured?

An additional insured is someone that has an interest or something to lose during the course of a job should something go wrong. By being named as an additional insured (either specifically or blanket basis) on an insurance policy, you are usually insured for covered losses that happen as a result of the “named insured’s” neglect.

For example, assume you are a general contractor and hire out a subcontractor for the roofing job, but his roofing skills on this particular job were subpar and you later learn the roof leaked, caused damages to the interior of the building, and cost thousands of dollars to repair. Because you were named as an “additional insured” by endorsement on the roofer’s insurance policy, you will be protected against damages caused by his negligence.

Not Knowing The Difference Can Be Financially Devastating 

As a business owner you need to be aware of the differences between these terms before you enter into any type of job agreement; otherwise, you may be jeopardizing the financial future of your business. Always verify there is in fact, a business insurance policy in effect before the job begins (certificate of insurance) and confirm you are named as an additional insured specifically protecting your interest during the scope of the business. Feel free to contact us at Burkett & Associates Insurance Agency at 256-704-7400 with any questions regarding Alabama business insurance and how certificate of insurance and additional insured may impact your business.