Avenants

The standard industry form used for a certificate of liability insurance. Learn to read it and you can read any certificate.

The ACORD 25 is the standardized Certificate of Liability Insurance form published by ACORD, used across the US industry to evidence general liability, auto, umbrella and workers’ compensation coverage on a single page.

Pourquoi c’est important : Because it is standardized, the same information sits in the same place on every certificate you receive. That makes verification fast once you know where to look: producer and carrier at the top, the named insured under it, then coverage rows with limits, then the description box and the certificate holder.

An exclusion that removes coverage when an injured employee’s claim reaches you through a general contractor. The most damaging exclusion in construction.

An action-over exclusion removes general liability coverage for claims brought against the insured by another party — typically a general contractor or owner — seeking indemnity for bodily injury to the insured’s own employee.

Pourquoi c’est important : Workers’ compensation bars the employee from suing you directly. So the employee sues the general contractor, who then seeks indemnity from you under the subcontract. That indemnity claim is exactly what an action-over exclusion removes from your general liability policy.

A party added to someone else’s policy so that policy defends and pays for claims arising from that party’s work.

An additional insured is a person or organization added to a liability policy by endorsement, giving them coverage under that policy for claims arising out of the named insured’s operations. It is created by an endorsement on the policy — not by wording typed into a certificate.

Pourquoi c’est important : This is the mechanism that pushes liability upstream in construction and in commercial leasing. A general contractor requires additional insured status on every subcontractor’s policy so that a claim from the sub’s work is defended by the sub’s carrier rather than the GC’s.

An endorsement that automatically grants additional insured status to anyone you have agreed in a written contract to cover — no need to name them individually.

A blanket additional insured endorsement extends additional insured status automatically to any person or organization the named insured has agreed, in a written contract executed before the loss, to add. It replaces the need for a separately issued scheduled endorsement per party.

Pourquoi c’est important : For contractors this is an operational necessity. A scheduled endorsement requires a request to the carrier and a wait for each new customer; a blanket endorsement means the certificate can be issued the same day the job asks for it, which is often the difference between winning and losing the work.

The party a certificate is issued to. Being one gives you a document, not coverage.

The certificate holder is the person or entity named in the lower-left box of a certificate of insurance as the recipient of the certificate. The designation confirms only that the certificate was issued to them.

Pourquoi c’est important : This is the most common misunderstanding in commercial contracting. Property managers, general contractors and clients see their name on a certificate and believe they are insured. They are not — certificate holder status confers nothing.

A one-page snapshot proving a policy existed on the day it was issued. It confers no rights and cannot amend the policy.

A certificate of liability insurance — usually the ACORD 25 form — is a document issued by an agent summarizing the insured’s coverage: carrier, policy numbers, terms and limits, with a description box and a certificate holder. It carries an explicit disclaimer that it confers no rights and does not alter the policy.

Pourquoi c’est important : Certificates are the currency of commercial work. A general contractor, property manager or enterprise client will not release a job, a lease or a payment without one, and the ability to produce one within hours is a real competitive advantage.

A document that amends the policy — adding, removing or changing coverage. The endorsements are where the real policy lives.

An endorsement, sometimes called a rider, is an attachment that modifies the terms of an insurance policy. It can broaden coverage, restrict it, add insureds, change limits or amend definitions, and it takes precedence over the base form.

Pourquoi c’est important : The base coverage form is largely standard; the endorsements are what make one policy different from another. Two quotes with identical limits and similar premiums can differ enormously once you read the endorsement schedule.

The endorsement that directs claim payment to a lender or other party with a financial interest in the property.

A loss payable provision, or lender’s loss payable endorsement, is a property endorsement designating a party with a financial interest in specified property as entitled to claim payment, and in the broader form granting that party notice and certain coverage rights.

Pourquoi c’est important : Lenders and lessors require this to protect collateral. The plain loss payee designation gives payment rights only; the lender’s loss payable form is broader, giving the lender notice of cancellation and, in some forms, coverage even where the insured’s own claim would fail.

A lender or lessor added to a property policy so claim payments on financed assets go partly to them.

A loss payee is a party named on a property or inland marine policy as entitled to receive payment for loss to specified property, typically because it holds a security interest as a lender or lessor.

Pourquoi c’est important : Every commercial loan and equipment lease requires this. The lender is protecting its collateral and will require a certificate naming it as loss payee — or mortgagee for real property — before funds are released.

Coverage from a new carrier for work done before the policy started. The cheaper alternative to tail coverage.

Nose coverage is prior acts coverage granted by an incoming claims-made insurer, setting a retroactive date earlier than the policy inception so past work remains covered under the new policy.

Pourquoi c’est important : When you change carriers on a claims-made policy you have two options: buy tail coverage from the old carrier, or get nose coverage from the new one. Nose coverage is usually cheaper and cleaner, because the new policy simply picks up your history.

Wording that makes your policy pay first, and stops it asking the other party’s insurer to share.

Primary and non-contributory is endorsement wording providing that the insured’s policy responds first for a covered claim and will not seek contribution from any other insurance available to an additional insured.

Pourquoi c’est important : Without it, two policies covering the same claim can each argue the other should pay, or split it pro rata. The upstream party — the general contractor, the owner, the landlord — does not want its own policy touched at all, so it requires this wording.

Pays for perishable stock lost to power failure or refrigeration breakdown. Not in the base policy.

Spoilage coverage is an endorsement covering loss of perishable stock resulting from a change in temperature or humidity caused by mechanical breakdown or power interruption, including off-premises utility failure when specifically included.

Pourquoi c’est important : Standard property insurance covers direct physical damage from a covered peril. A compressor failing or the utility losing power is neither, so the ruined product is excluded until you endorse spoilage on.

Employer’s liability coverage added to your general liability policy where a state fund does not provide it.

Stop gap coverage is a general liability endorsement providing employer’s liability insurance for employees in monopolistic state fund states, where the state fund policy supplies statutory benefits but no employer’s liability protection.

Pourquoi c’est important : Workers’ compensation pays statutory benefits. Employer’s liability covers the suits that fall outside the benefit schedule: third-party-over actions where a general contractor seeks indemnity for an employee injury, loss of consortium claims, and dual capacity claims. Private comp policies include it as Part Two; exclusive state funds generally do not.

An agreement not to let your insurer pursue the other party after a claim. Standard in construction and leases — and it needs a policy endorsement.

A waiver of subrogation is a contractual agreement in which one party gives up its insurer’s right to recover from the other party after a loss. It is implemented on the insurance side by a waiver of transfer of rights endorsement.

Pourquoi c’est important : Owners, general contractors and landlords require it so that a loss stays with the insurer that was paid to cover it, rather than becoming litigation between parties working on the same project. It is standard, reasonable and near-universal in construction contracts and commercial leases.

An endorsement for sewer, drain and sump pump backup — excluded on every standard property form.

Water backup coverage is an endorsement covering direct damage from water or waterborne material that backs up through sewers, drains or sump pumps, a cause of loss excluded by standard commercial property policies.

Pourquoi c’est important : This is one of the most common commercial property losses and it is excluded by default. It is also distinct from flood, which is surface water and needs a separate policy, and from a burst supply line, which the base policy usually covers.