Glossary

Compliance glossary

The terms that appear on certificates, endorsements, and tax forms — defined plainly.

Insurance

ACORD 25also: Certificate of Liability Insurance: The standard industry form used as a certificate of liability insurance in the United States, summarising a vendor’s general liability, auto, umbrella, and workers’ compensation coverage on a single page.
Additional insured: A party other than the policyholder who is extended coverage under that policy by endorsement, typically so a hiring organisation is protected against claims arising from its vendor’s work.
Aggregate limit: The maximum an insurer will pay for all covered claims during a policy period, as distinct from the per-occurrence limit that caps any single claim.
Certificate holder: The party a certificate of insurance is issued to. Being named as certificate holder confirms only that the certificate was addressed to you — it grants no coverage and no right to notice on its own.
Certificate of insurance (COI): A one-page summary issued by an insurer or broker evidencing that a business carries specific coverage, showing policy types, limits, and effective dates. It is evidence of insurance, not the policy, and confers no coverage itself.
Endorsement: An amendment attached to an insurance policy that adds, removes, or modifies coverage. Requirements such as additional insured status and waiver of subrogation are granted by endorsement, not by the certificate that references them.
General liability insurance: Coverage protecting a business against third-party claims for bodily injury, property damage, and personal or advertising injury arising from its operations.
Named insured: The person or entity the policy is issued to. A mismatch between the named insured and the legal entity you actually contracted with is a common reason a certificate fails to provide the protection assumed.
Primary and non-contributory: A contractual requirement that the vendor’s policy pays first on a covered claim and does not seek contribution from your own policy, added to the vendor’s policy by endorsement.
Subrogation: An insurer’s right to pursue a third party that caused a loss it has paid out on, stepping into the policyholder’s position to recover the payment.
Waiver of subrogation: An endorsement in which an insurer gives up its right to recover a paid claim from a specified third party, commonly required of vendors so their insurer cannot later pursue the hiring organisation.
Workers' compensation insurance: Coverage paying medical costs and lost wages for employees injured in the course of their work. Uninsured subcontractor payroll is commonly reclassified onto the hiring party at insurance audit.

Tax forms

Backup withholding: A requirement that a payer withhold a flat percentage of a payment — currently 24% — and remit it to the IRS when a payee has not supplied a valid taxpayer identification number.
EIN (Employer Identification Number): A nine-digit number the IRS issues to identify a business entity for tax purposes, used in place of a Social Security number on a W-9 by most entities.
Form 1099-MISC: An information return reporting miscellaneous payments such as rents, prizes, and certain legal settlements — distinct from the 1099-NEC, which reports payments for services.
Form 1099-NEC: An information return reporting non-employee compensation — payments made for services performed by someone who is not an employee, such as a contractor or vendor.
Form W-9: The form used to collect a vendor’s legal name, address, tax classification, and taxpayer identification number. It is kept on file by the payer rather than filed with the IRS.
Information return: A form filed with the IRS reporting payments made to another party rather than the filer’s own tax liability. The 1099 series are information returns.
TIN (Taxpayer Identification Number): The identifying number a taxpayer uses with the IRS — a Social Security number for individuals, or an EIN for most entities. A missing or incorrect TIN is what triggers backup withholding.
TIN matching: Checking a payee’s name and taxpayer identification number against IRS records before filing, so mismatches are corrected before they become penalties.

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