The Basics: If another organization is using your facilities, you (the church) should request the other organization add your church as an Additional Insured on the other organization’s insurance policy. They should then support the request/requirement with a Certificate of Insurance (COI) obtained from the other organization’s insurance agent or the insuring company. For extra precaution, send the COI to your agent for verification.
Churches should also include a clause in their agreements with outside groups specifying that they must name the church as an additional insured on their insurance policy.
What Too Often Happens Instead: The other organization presents a copy of their insurance policy or they present a Certificate of Insurance showing the church as Certificate Holder.
The roles of a certificate holder and an additional insured are often misunderstood and this confusion can leave churches vulnerable to liability and financial risks so let’s briefly examine these differences.
What Is A Certificate Holder? A certificate holder is an entity (or individual) that receives proof of insurance from another party. The certificate, normally called a Certificate of Insurance, verifies that the insured party has active coverage. However – it’s important to note that a certificate holder does not receive any coverage or protection under the other party’s insurance. You simply have documented proof that they have coverage.
What Is An Additional Insured? An additional insured is an organization (or person) which has been added to the insurance policy of the another party. An additional insured is typically added via a rider or endorsement and the church is actually protected under that policy. Or to think of it another way, you are ensuring the other party’s insurance responds first.
Is There A Cost For The Other Organization To Add The Church As An Additional Insured? This can vary by insurance carrier from $0 to around $100 annually so there is really no reason for the church not to be protected from others that are using your facilities.
Final Thoughts: You may have thought it was more complicated but it’s really that simple. The tendency may be to just accept the other party’s proof of insurance but if you do not require the additional insured status from those using your facilities or property, in the event of a claim, you are potentially leaving yourself open for damages and defense costs if a lawsuit arises. Why risk it?
That’s really about all you need to know, but for further understanding of what a Certificate of Insurance should look like, here’s that information.
How to Read Your Certificate of Insurance
A Certificate of Insurance can be broken down into nine main sections and each of these sections has a different, yet crucial, purpose.
1. Disclaimer
The disclaimer states that the Certificate of Insurance is merely a representation of your existing coverage and does not “amend, extend, or alter” your policies.
2. Producer
This section will list the name and address of the insurance agent or broker who issued your COI.
3. Insured
The legal name and address of the business covered under the insurance policies described on the COI.
4. Insurers Affording Coverage
This section will list all of the insurance companies that the Insured has policies under. They are listed A through F.
5. Coverages
Your “Coverages” section is the longest, as this is where you will find all of the details of the insurance policies, including insurance type, effective dates, and limits. This area is where COIs tend to get a little confusing, so let’s break it down.
At the far left on the above example, you’ll see a column labeled “INSR LTR.” This is short for “Insurer Letter”; the letter you see here will correspond to the Insurer Affording Coverage as described earlier.
“Type of Insurance” refers to the type of coverage afforded by policy, whether general, auto, garage, excess, or worker’s comp liability coverage.
Next you’ll see two columns labeled “ADD’L INSRD” and “SUBR WVD.” The first one stands for “Additional Insured,” as you might have guessed. An X placed in this column indicates that the person being issued the Certificate is an additional insured on the policy.
“SUBR WVD” stands for “Subrogation Waiver” which we won’t go into currently but if this box is checked off, that means that the insurance company of the named insured will not be able to pursue legal action against specified parties that usually include the Certificate Holder (see #7 above) in the event of a claim, even if they were directly responsible for the damages.
Next is listed the appropriate policy number, as well as the effective dates of the policy. The last column shows the limits (in dollars).
6. Description of Operations
If there are any specific operations, locations, or projects that the COI applies to, they will be listed here. This is also where the Certificate would list information about any Additional Insured or Subrogation of Waiver.
7. Certificate Holder
The name and address of whoever is requesting the Certificate of Insurance. In some cases, this may be the business itself; in other cases, it may be their client or another institution.
8. Cancellation
This is another disclaimer that lists the number of days that the insurance company will send notice to the Certificate Holder in the event that any of the policies are cancelled before the expiration date listed. Thirty days is standard.
9. Authorized Representative
Your Certificate of Insurance must include the signature of your insurance agent/broker or a representative of the agency.
