九色

In my September 2025 column, I wrote about certificates of insurance as a prequel to an October Academy of Insurance webinar I did on certificates, with a little bit about additional insured (AI) issues involving certificates.

On April 2, 2026, I’ll be doing a follow-up and more detailed webinar on AI issues for the Academy titled “The Additional Insured Illusion (and Other Feats of Contractual Risk Transfer Magic),” with a little bit about certificate issues, specifically a brand new and important change in the ACORD 25 form that I’ll touch on at the end of this article.

This begs the question, why am I doing these webinars now? If we go back about 20-25 years when I was with the Big “I” national agent association, a huge amount of my time was spent answering questions about certificates of insurance (COI) and additional insureds (AI…not to be confused with artificial intelligence) issues. This led to the development of a series of articles on these issues, and ultimately a white paper, along with dozens of webinars and seminars.

I worked on these issues for several years, while our state associations worked with regulators and legislators, to introduce legislation, regulations, and insurance department directives in about 90% of states to address marketplace issues. As a result of these collective efforts, by the time I retired in 2016, it seemed that calmer waters prevailed.

Move forward 20 years and we now have a new generation of agents, underwriters, adjusters, risk managers, attorneys, contractors, etc., who are dealing once again with many of the same issues that we thought were resolved decades earlier. I have been getting the same questions I got 20-25 years ago, and I see them almost daily in business social media websites like LinkedIn.

To illustrate, here is a question from a Texas agent: “In the past, we have not been individually adding Additional Insured endorsements, relying on them being an indemnitee in the ‘insured contract’ wording of the CGL or BOP policies, which gives them AI status without endorsing that on the policy.”

Clearly, this agent does not understand the significant difference between being an indemnitee and/or an AI under a liability policy, nor are they familiar with legal requirements regarding AI status in their state.

‘Belt and Suspenders’

Having status under both categories provides a “belt and suspenders” risk management approach. It’s not only usually a good idea, it’s often the law. I had similar questions from South Dakota and New York agents, suggesting that this misunderstanding could be widespread.

Another agent said that their insured general contractor requires all subs to sign hold-harmless agreements in his favor, so he questions why the general contractor needs his own liability policy. In this case, the agent confuses indemnification with coverage, not as an additional insured but under his own insurance coverage.

Your commercial insureds likely have assumed potential liability under many types of contracts, from construction to leases and HOA bylaws to loan agreements and various types of hold-harmless and indemnity agreements in other contracts. So, it is critical to understand what types of coverages are provided by insurance forms with regard to status as an indemnitee or insured.

As I write this month’s column, it is likely that you insure a contractor or business owner who has just entered into a contract under which he or she is already in default because they did not understand the liability they were assuming. For example, one contract states, “Contractual liability insurance shall apply to all indemnity agreements.” No insurance policy I’ve ever reviewed fully covers the indemnity agreements found in most contracts.

Other issues involve the exact language of the additional insured endorsement being used. There are literally hundreds of non-ISO AI endorsements in the marketplace. Some of them only cover vicarious liability, but that fact isn’t clear in the form because the term “vicarious liability” is not used. Some of these endorsements also provide only excess coverage, not the “primary and noncontributory” coverage requested by so many contracts, especially in the construction industry.

‘No insurance policy I’ve ever reviewed fully covers the indemnity agreements found in most contracts.’

Downsides

Even though AI status is requested in so many contracts, there are downsides to being an additional insured under someone else’s policy. The most well-known reasons include sharing of limits, loss of claim resolution or litigation control, complications in defending claims across multiple policies and insurers, etc.

In addition, there can be unanticipated situations where being an additional insured under someone else’s policy can adversely affect coverage under one’s own policy. In the webinar, I’ll give specific examples of where this has happened in both CGL policies and in property policies covering buildings insured under triple net leases.

Finally, as I mentioned earlier in this article, ACORD recently made a major change in the ACORD 25.

In the new December 2025 (12/25) edition, the ACORD 25 says, “LIMITS SHOWN ARE INCLUSIVE OF AMOUNTS REQUESTED BY THE CERTIFICATE HOLDER AND MAY NOT REFLECT POLICY LIMIT AMOUNTS IN EXCESS OF THOSE REQUESTED.”

My interpretation of this statement is that ACORD is saying that the limit shown may only reflect the limit required by the contract the insured has entered into and not the full policy limits.

For years, the ACORD 25 Forms Instruction Guide (FIG) under, for example, the Occurrence Limit field has said, “Enter limit: The general liability, each occurrence limit amount.” In other words, in this field you would enter the actual occurrence limit provided by the policy. The reason is that the COI certifies the policy, not compliance with a contract.

For example, your insured has a CGL policy with a $2 million occurrence limit and enters into a contract requiring a $1 million occurrence limit. Your insured doesn’t want the other party to know they have more insurance available than required by the contract (even though there is likely an unlimited indemnification requirement). As I read the new ACORD 25 language, it is acceptable to show only the $1 million limit required by the contract on the COI.

A potential problem is that most states now have statutes, regulations, or DOI directives that instruct or arguably imply that the agent must show the actual policy terms on the COI. Again, the purpose of a COI historically has been to certify policy coverages and limits, not compliance with a separate third-party contract. This issue will be addressed during the webinar.

Are you comfortable that your staff recognizes these issues from the standpoint of properly insuring your customers and assisting them in compliance with the contracts they enter into?

If not, consider signing them up for the April Academy of Insurance webinar at: www.ijacademy.com.

Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority has ranked as the #1 insurance book of all time. He can be reached at InsuranceCommentary@outlook.com.