When navigating the insurance landscape, you may come across two important terms: Certificate of Insurance and Additional Insurance. While they might sound similar, they serve distinct purposes. In this blog post, we’ll demystify these terms and break down the difference between these two insurance documents.
Certificate of Insurance: Proof of Coverage
In the logistics business, clients, vendors, and partners often request proof of insurance coverage. This is where the Certificate of Insurance comes into play. It serves as tangible evidence that the policyholder’s business is protected against potential liabilities.
This document, issued by an insurance provider or company, provides key information such as the policyholder’s name, name of policy provider, types of coverage, policy number, coverage limits, and effective dates. It provides evidence to those working with us that they are dealing with a responsible and insured logistics provider.
Shippers who partner with us can ask for a Certificate of Insurance to ensure we are adequately covered. They can request COI directly from our insurance provider and become certificate holders on our policy.
A Certificate of Insurance doesn’t grant additional coverage on its own; it simply demonstrates that the policyholder has a reliable insurance plan in place protecting his operations.
Additional Insurance: Tailored Coverage
While a standard insurance policy covers general risks, the logistics industry often faces unique challenges that standard insurance might not fully address. This is where Additional Insurance steps in. It allows the policyholder to tailor the coverage to match their specific needs. Whether it’s insuring specific cargo types, extending coverage to their shippers, or protecting against niche risks.
Consider Additional Insurance as an add-on or an upgrade to the existing policy. It provides supplementary coverage by extending or modifying specific terms, conditions, or limits. If you are additionally insured, your logistics service provider has extended their insurance coverage to you.
For example, suppose a shipper wants to transport their valuable electronics, while the base policy of their broker covers general risks. In that case, it may not account for the higher value of these delicate gadgets. To bridge this gap, shippers can ask their broker to opt for Additional Insurance that specifically covers the increased value of the cargo. If any unfortunate mishaps occur during transit, you will get protection against potential financial losses.
Certificate Holder vs. Additional Insured
Being a certificate holder is just evidence that their broker or logistics provider has proof of insurance and commercial general liability policies. But they don’t get any rights mentioned in the policy to the shipper directly. In case of any damage or personal injury, they won’t be able to open a claim. Only their broker or logistics partner will be able to do so.
If a shipper is additionally insured, their third party logistics provider has extended its insurance coverage to them. They can open a claim on the policyholder’s insurance in case of any mishappening resulting in cargo damage or personal injury.
Understanding the difference between a Certificate of Insurance and Additional Insurance is crucial for a shipper, carrier, or broker. While the Certificate of Insurance serves as proof that the policyholder has a valid policy, Additional Insurance allows one to customize and enhance their coverage to match their unique needs.
For any logistics company, ensuring that it has the right insurance coverage is crucial to protecting itself and its shippers from any unforeseeable circumstances. As a shipper-friendly company, US Ravens provides COI and Additional Insurance to all our shippers. So, the next time you work with us, know that your cargo is in safe hands.