CSLB Law & Business ExamInsurance and LiensMedium
A property owner asks a roofing contractor for proof of insurance before allowing work to begin. The contractor provides a certificate of insurance listing the owner as a certificate holder. Later, a worker is injured and the owner is sued; the owner discovers the certificate alone does not extend policy coverage to protect the owner. What should the owner have requested instead?
- AAn additional insured endorsement naming the owner under the contractor's policy
- BA copy of the contractor's workers' compensation policy declarations page
- CA performance bond naming the owner as obligee
- DA conditional waiver and release from the contractor
Show answer & explanationAnswer & explanation
Correct answer: A. An additional insured endorsement naming the owner under the contractor's policy
A certificate of insurance is merely evidence that a policy exists; it does not by itself grant any coverage rights to a third party. To actually be protected under the contractor's liability policy, the owner needed an additional insured endorsement, which contractually extends coverage to the named party.
Why the other options are wrong
- B. Workers' compensation covers the contractor's employees, not the owner's liability exposure.
- C. A performance bond addresses contract performance, not liability coverage.
- D. Lien waivers relate to payment disputes, not insurance protection.
Certificate of Insurance vs. Additional Insured
A certificate of insurance is proof a policy exists but grants no rights; an additional insured endorsement is required to actually extend coverage to a third party.
- Certificates are informational, not contractual
- Endorsements amend the policy to add covered parties
- Owners seeking real protection should require endorsements, not just certificates
Memory trick: A certificate just tells you it exists — the endorsement is what insists on coverage.