Consider this scenario: a professional custodian working at a local high school accidentally breaks through an important pipe while trying to fix a toilet. A huge mess is a result, with plenty of accompanying cleanup and repair costs. It’s the janitor’s fault, and he can be expected to be held monetarily responsible for the incident.
Prospective clients or employers also often ask entrepreneurs or business owners to provide a Certificate of Insurance with the employer listed as “additional insured”.
That means that the employer’s name and address are listed on the certificate itself. In case something goes wrong, the Additional Insured listed on a Certificate of Insurance can also make a claim against the policy holder’s insurance directly.