What’s the BIG Deal – Additional Insured vs. Certificate Holder?

Aug 11, 2015 at 03:32 PM CST
By JAY THOMAS Transportation Safety & Risk Management Professional For those of you who do not know the difference, the difference is HUGE. The “Certificate Holder” is going to receive notification of changes or cancellation in coverage. However, “Additionally Insured Endorsement” provides the party with your insurance coverage and the rights to your defense under such coverage. So if you are the motor carrier and XYZ is the Shipper or Broker who provided you the freight and you have a contract with XYZ Company and have provided XYZ Company with “Additionally Insured Endorsement”. During the course of operations there is an accident which results in both you and the shipper being sued for liability in the accident. XYZ Company will be able to stand upon your insurance because you named them as additionally insured under your policy. However if you had only provided XYZ company “Certificate Holder” status they would not be able to benefit from your coverage or defense. They would have to pay for their own attorneys to defend and would have to depend on their Contingent Insurance. Keep in mind that just because you do not provide “Additionally Insured Endorsement” status does not mean that you may not be legally responsible for paying for XYZ’s reasonable attorney fees if the liability was found to be yours. Typically the transportation agreement outlines the Indemnification requirements for both parties. If you are a BROKER or SHIPPER - With respect to additional insured status, you need to be sure to secure a copy of the endorsement to the AL policy proving that the carrier/carrier’s insurance broker has in fact added YOU to the AL coverage via an endorsement. I have seen several instances lately with brokers and shippers where they have received a Certificate of Insurance denoting their additional insured status only to learn later that no endorsement was actually added to the AL policy – rendering the Certificate worthless (other than a potential E&O claim against the carrier’s insurer). This is an extra step, but one the carrier should be able to complete just as easily as securing a copy of the Certificate. If you are the CARRIER – then try to not provide “Additionally Insured Endorsement Status to anyone. Keep in mind, most insurance companies charge to provide this endorsement. And you need to make sure that the Transportation Agreement is properly prepared. The larger and more reputable Brokers and Shippers will not entertain only being a “Certificate Holder”, They will want and demand to be “Additionally Insured”. Bottom line make sure that the people you have in charge of your transportation contracts and Insurance know what they “ARE” and “ARE NOT” allowing and why! Are they waiving Subrogation or 49 C.F.R. § 370? What about right to Salvage? What exposure do you have for allowing a party to OPT-OUT for Worker’s Compensation? Do your Rate Confirmations supersede your Transportation Agreement? https://www.linkedin.com/grp/post/2167050-103621858

Aug 11, 2015 at 03:32 PM CST

By JAY THOMAS Transportation Safety & Risk Management Professional

For those of you who do not know the difference, the difference is HUGE. The “Certificate Holder” is going to receive notification of changes or cancellation in coverage.

However, “Additionally Insured Endorsement” provides the party with your insurance coverage and the rights to your defense under such coverage.

So if you are the motor carrier and XYZ is the Shipper or Broker who provided you the freight and you have a contract with XYZ Company and have provided XYZ Company with “Additionally Insured Endorsement”. During the course of operations there is an accident which results in both you and the shipper being sued for liability in the accident. XYZ Company will be able to stand upon your insurance because you named them as additionally insured under your policy.

However if you had only provided XYZ company “Certificate Holder” status they would not be able to benefit from your coverage or defense. They would have to pay for their own attorneys to defend and would have to depend on their Contingent Insurance.

Keep in mind that just because you do not provide “Additionally Insured Endorsement” status does not mean that you may not be legally responsible for paying for XYZ’s reasonable attorney fees if the liability was found to be yours. Typically the transportation agreement outlines the Indemnification requirements for both parties.

If you are a BROKER or SHIPPER - With respect to additional insured status, you need to be sure to secure a copy of the endorsement to the AL policy proving that the carrier/carrier’s insurance broker has in fact added YOU to the AL coverage via an endorsement.
I have seen several instances lately with brokers and shippers where they have received a Certificate of Insurance denoting their additional insured status only to learn later that no endorsement was actually added to the AL policy – rendering the Certificate worthless (other than a potential E&O claim against the carrier’s insurer). This is an extra step, but one the carrier should be able to complete just as easily as securing a copy of the Certificate.

If you are the CARRIER – then try to not provide “Additionally Insured Endorsement Status to anyone. Keep in mind, most insurance companies charge to provide this endorsement. And you need to make sure that the Transportation Agreement is properly prepared. The larger and more reputable Brokers and Shippers will not entertain only being a “Certificate Holder”, They will want and demand to be “Additionally Insured”.

Bottom line make sure that the people you have in charge of your transportation contracts and Insurance know what they “ARE” and “ARE NOT” allowing and why!

Are they waiving Subrogation or 49 C.F.R. § 370?

What about right to Salvage?

What exposure do you have for allowing a party to OPT-OUT for Worker’s Compensation?

Do your Rate Confirmations supersede your Transportation Agreement?

https://www.linkedin.com/grp/post/2167050-103621858