Additional Insured vs. Certificate Holder: What Landlords Need

What Is the Difference Between an Additional Insured and a Certificate Holder?

A certificate holder is simply the person who receives proof of insurance. An additional insured is added to someone else's policy by endorsement and can ask that policy to defend and pay certain claims against them.

Landlords usually want both: additional insured status on the tenant's liability policy, and a certificate that shows it.

What Does a Certificate of Insurance Actually Do?

A certificate of insurance shows that a policy existed on the date the certificate was issued, with the listed limits and dates. That's all. It is evidence, not coverage.

Texas law says this directly. Under Insurance Code Chapter 1811, a certificate is not an insurance policy and does not change, extend or modify the coverage it describes (§1811.152). It gives the holder no rights beyond the policy and any signed endorsement (§1811.153).

The usual liability certificate is the ACORD 25. ACORD's standard forms are deemed approved in Texas once they are filed with TDI (§1811.103). An insurer or agent may not issue a certificate that changes the policy's terms (§1811.051).

How Should a Landlord Be Added as an Additional Insured?

By an endorsement on the tenant's commercial general liability policy and any umbrella policy. The endorsement decides what you're covered for, so the form matters.

• Tenants: ISO form CG 20 11 (Additional Insured – Managers or Lessors of Premises) is common for landlords. It generally covers liability arising from the part of the premises leased to the tenant. It generally does not cover parts of the property that aren't leased to the tenant, or structural alterations, new construction or demolition done by you or for you.
• Contractors: forms such as CG 20 10 (ongoing operations) and CG 20 37 (completed operations) cover liability caused, at least in part, by the contractor's work. Completed operations coverage matters for roofs, remodels and anything that could fail after the job ends.
• Blanket endorsements: many policies automatically add anyone the insured agreed in a written contract to add. Make sure your lease or contract actually requires it, because the endorsement usually depends on that written agreement.

Additional insured coverage is shared. It uses the tenant's limits, so a claim against you can reduce what's left for the tenant.

What Does Primary and Noncontributory Mean?

It means the tenant's or contractor's policy pays first and doesn't ask your policy to share the cost. Without it, two policies covering the same claim may split it, putting part of the loss on your own record.

Policies have “other insurance” rules that decide which one pays first. Primary and noncontributory wording changes that order for additional insureds when a written contract requires it. It is often added by an endorsement such as ISO CG 20 01.

What Is a Waiver of Subrogation, and When Should You Agree to One?

A waiver of subrogation is a promise not to let your insurer recover from another party after it pays your claim. Subrogation is the insurer's right to step into your shoes and pursue whoever caused the loss.

Leases often include mutual waivers. Each side looks to its own property insurance and gives up claims against the other, which can prevent landlord-tenant lawsuits after a fire. But your own policies must allow the waiver.

• Property: most commercial property forms let you waive recovery rights in writing before a loss. Check your policy's transfer of rights condition.
• Liability and workers' comp: waivers on these policies usually need an endorsement, such as ISO CG 24 04 for general liability. Some insurers charge for them.
• Before you sign: tell your agent about every waiver you agree to. A waiver your policy doesn't allow could hurt a claim.

How Do Hold Harmless and Indemnity Clauses Fit In?

A hold harmless agreement is a contract promise: one party agrees to protect the other from certain claims and costs. Insurance is how that promise usually gets funded.

Leases and service contracts often ask the tenant or contractor to indemnify the owner for claims arising from their use or work. Many liability policies cover some of these promises as contractual liability under the policy's insured contract definition. Whether a specific clause is covered depends on its wording and the policy.

Texas limits these clauses in construction contracts. Under the Texas Anti-Indemnity Act, a clause requiring a contractor to indemnify or defend an owner for the owner's own negligence or fault is generally void (Tex. Ins. Code §151.102). Additional insured requirements that go beyond what the chapter allows are unenforceable to that extent (§151.104). The chapter has exceptions, including some employee claims.

What Should Your Lease or Contract Require?

Specific insurance requirements, in writing, as a condition of move-in or starting work. Your attorney sets the legal terms, and your agent can suggest limits and coverage wording that fit the property. See also lease insurance requirements.

From Tenants

• Commercial general liability. Many landlords ask for at least $1 million per occurrence and $2 million aggregate, set higher for riskier uses.
• Additional insured status for you (and your lender and property manager if needed), on a primary and noncontributory basis.
• Umbrella or excess liability for higher-risk uses such as restaurants, bars or gyms.
• Property coverage for the tenant's own contents and improvements, plus business income.
• Liquor liability if the tenant sells or serves alcohol.
• Workers' compensation, or the alternative your attorney approves if the tenant is a non-subscriber.
• A waiver of subrogation, if your lease uses mutual waivers.
• A certificate and endorsements before move-in, and again at every renewal.

From Contractors and Vendors

• General liability with ongoing and completed operations additional insured coverage for you.
• Commercial auto for vehicles used on site.
• Workers' compensation, or a written plan for employee injuries.
• A current certificate before work starts, even for a one-day job.

In a triple net lease, be clear about who insures the building itself. Many owners keep the building policy in their own name and recover the cost through the lease. Our shopping center page covers how this works for retail.

How Do You Track Tenant and Contractor Certificates?

Keep one list, check every certificate against the lease or contract, and follow up before anything expires. A certificate only proves coverage on the day it was issued.

• Log each certificate with the expiration date of every policy on it.
• Ask for renewals 30 days before expiration, and follow up until they arrive.
• Don't let contractors start work without a current certificate.
• Look more closely at higher-risk tenants such as restaurants, bars, gyms and auto repair shops.
• Keep old certificates and endorsements. Claims can surface long after an incident.

What Happens When a Tenant's Coverage Lapses?

Often you find out late, because certificate holders don't automatically get notice. In Texas, a holder has a legal right to notice of cancellation only if the policy or an endorsement names them and the policy or a law requires notice (§1811.155).

That's why tracking matters. Your lease should say what happens if a tenant's coverage lapses, and remedies are a question for your attorney. On the insurance side, your own liability policy is your backstop for a lapse in coverage. Many owners of leased buildings carry a lessor's risk only policy designed for property leased to others.

What Should You Do Next?

1. Pull every lease and service contract, and list the insurance each one requires.
2. Collect current certificates and additional insured endorsements from every tenant and regular contractor.
3. Set up a tracking list with expiration dates and 30-day reminders.
4. Ask your agent whether your own policies allow the waivers of subrogation your leases contain.
5. Have your attorney review indemnity and insurance clauses, especially in construction contracts.
6. Make sure your own liability policy fits the property, including common areas.
7. For a review of your lease insurance requirements, contact us or request a quote.

Questions Owners Ask

Sources

1. Texas Insurance Code §1811.152 — Certificate of insurance not policy of insurance
2. Texas Insurance Code §1811.153 — Rights conferred by certificate of insurance
3. Texas Insurance Code §1811.155 — Notice
4. Texas Insurance Code §1811.051 — Altering, amending, or extending the terms of an insurance policy
5. Texas Insurance Code §1811.103 — Standard certificate of insurance forms
6. Texas Insurance Code §151.102 — Indemnification provisions in construction contracts
7. Texas Insurance Code §151.104 — Additional insured provisions in construction contracts