Nonprofit Insurance Program

Certificate of Insurance: What is it and How Does it Work

By Alexa Connelly
February 16, 2018

As a nonprofit, you have a mission to make your community a better place. To accomplish this task, you often need to be present at local community events, host fundraisers, or set up at vendor events. These are great ways to raise funds and awareness for your nonprofit’s purpose. In many cases, you enter into agreements or contracts with other organizations.

Navigating through the fine print of these agreements can be tedious and often worrisome. A common requirement listed by event coordinators or businesses is insurance. They often ask for certificates of insurance to show proof of coverage and request to be listed as an additional insured on your policy.

What is a Certificate of Insurance?

A certificate of insurance is an accord form that shows proof of coverage. The document includes information about your existing policy including the type of coverage, policy dates, insurance carrier, and the name of the agency issuing the certificate. You can request a certificate of insurance from your insurance agency as needed.

What is an Additional Insured?

A certificate of insurance will also list additional insureds that you have added to your policy. An additional insured is a third-party that requests coverage under your insurance. They can be added via endorsement by your insurance company and requested through your agent. Many times, event coordinators or venues request to be added to your policy when you host or participate in an event.

By listing the third party as an additional insured, you are agreeing to any claims that arise at the venue or event will be covered by your insurance instead of falling under their policy.

Who Can be Added as an Additional Insured?

You can’t just list anybody as an additional insured. The party requesting additional insured coverage must have a business relationship with your nonprofit. For example, if you want to host a fundraiser at a local restaurant, the restaurant qualifies as an additional insured because you have a business function at their location. Coverage for the organization only applies while you are participating in a special event that is specified on the endorsement.

What Does It Cost to Add an Additional Insured?

Every insurance company has a different stance on additional insureds. Some will add them at no cost, others include a blanket additional insured endorsement, and some will charge based on the event. Insurance companies typically want to know the following:

  • Who is the additional insured?
  • What is their relationship with your nonprofit?
  • What are the days/times of the event?
  • A description of the event

If the event is multi-day, offers alcohol for purchase, or has other increased risks, some insurance carriers will require a special event liability insurance policy instead of the additional insured endorsement. To find out the requirements of your insurance company, contact your agent for additional information.

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