What a Certificate of Insurance Does Not Do, and Why Virginia Contractors Get Burned
Key takeaways
- A certificate of insurance confers no coverage. The ACORD 25 says so on its own face.
- Additional insured status exists only when the policy carries the endorsement. A line on the certificate does not create it.
- Virginia raised its contractor license thresholds in 2025. Class A now begins at 150,000 dollars per contract, not 120,000.
- The Board for Contractors does not require general liability insurance for licensure. Your customers will.
- Contracting without the right license class is a Class 1 misdemeanor and can leave the contract unenforceable by you.
Ask a contractor whether the sub on site is insured and you will usually get a certificate handed over. Ask whether that certificate actually protects the business and you will usually get a pause.
It is worth being precise here, because the document itself is unusually honest about its own limits and almost nobody reads that part.
What the certificate says about itself
The standard form is the ACORD 25, Certificate of Liability Insurance. Its header states that it is issued as a matter of information only, that it confers no rights upon the certificate holder, and that it does not amend, extend or alter the coverage afforded by the policies listed.
Then it adds the sentence that matters most. If the certificate holder is an additional insured, the policy must be endorsed, and a statement on the certificate does not confer rights to the certificate holder in place of that endorsement.
Read plainly: the certificate is a snapshot. It tells you a policy existed on the day it was issued. It does not make you an insured, it does not stop the policy being cancelled the following week, and it creates no contractual obligation on the insurer to you.
Certificate holder versus additional insured
These get used interchangeably in conversation and they are not close to the same thing.
- Certificate holder means you receive the evidence, and usually notice of cancellation. You get information. You get no coverage.
- Additional insured means you are actually an insured under someone else’s policy. That status is created by an endorsement to the policy, commonly a CG 20 10 for ongoing operations or a CG 20 37 for completed operations, or by a blanket additional insured provision in the form itself.
Completed operations is the one that gets dropped. A contractor who is an additional insured for ongoing operations only has no protection for a claim that surfaces after the job is finished, which is when most construction defect claims actually surface.
The practical rule: collect the endorsement, not just the certificate. If a subcontractor cannot produce the endorsement page, you do not have what your contract says you have.
What Virginia actually requires to be licensed
Here is where a lot of published guidance is simply wrong, and where the rules changed recently.
Virginia amended its contractor license thresholds in 2025. The current classes under section 54.1-1100:
- Class A: 150,000 dollars or more on a single contract, or 1,000,000 dollars or more in any twelve month period.
- Class B: 30,000 up to 150,000 dollars on a single contract, or 250,000 up to 1,000,000 dollars annually.
- Class C: over 1,000 and under 30,000 dollars on a single contract, or under 250,000 dollars annually.
The higher of the two tests governs, and work under 1,000 dollars needs no state license.
If you go looking, you will still find the old 120,000 and 750,000 Class A figures published widely, including in at least one Fairfax County document for prospective contractors. Those are out of date. Two trades are a real exception rather than a stale page: water well drilling and landscape irrigation contractors are still governed by the older figures under section 54.1-1103.
Now the part that surprises people. The Board for Contractors does not require general liability insurance as a condition of licensure. Read the regulations for Class A, B and C and you will find a qualified individual, experience, an exam, a financial position test and a basic business course. Insurance is not on the list. Workers compensation is not a Board licensing condition either, though it is a separate legal obligation and a condition of your local business license. Fairfax County requires written certification of workers compensation compliance as part of its business licensing.
What the Board does test is net worth: 45,000 dollars for Class A, 15,000 for Class B, with the option of posting a 50,000 dollar surety bond instead. Class C has no financial requirement.
What your customers require, which is stricter
Virginia will license a contractor carrying no liability insurance at all. Practically nobody will hire one.
Fairfax County contracts give a good picture of what a sophisticated buyer asks for: statutory workers compensation with employers liability at no less than one million dollars, commercial general liability at one million per occurrence and two million aggregate, auto liability at one million, carriers rated A:VII or better, the County named as additional insured on all liability policies, wording that the coverage is primary to any coverage the County holds, a waiver of subrogation with copies of the endorsements as proof, and thirty days notice of cancellation or non renewal.
Private general contractors across Fairfax, Arlington and Alexandria ask for the same shape with limits that move by job. If your policy cannot deliver primary and non contributory wording and a waiver of subrogation, you will lose work over it long before the Commonwealth ever notices.
What it costs to get the license wrong
Contracting or bidding without a license, or holding the wrong class for the value of the work, is a Class 1 misdemeanor with a fine of up to 500 dollars for each day in violation.
The commercial consequence is worse. The contract is generally unenforceable by the unlicensed contractor, so you can perform the work and be unable to sue to get paid. There is a narrow escape for a contractor who substantially performed in good faith without actual knowledge of the requirement, but letting a license lapse creates a rebuttable presumption that you knew.
Frequently Asked Questions
Does a certificate of insurance give me coverage?
No. The ACORD 25 states in its own header that it is informational, confers no rights on the certificate holder, and does not amend or extend the policies listed. It is evidence that a policy existed when it was issued, nothing more.
What is the difference between a certificate holder and an additional insured?
A certificate holder receives evidence and usually notice of cancellation, and has no coverage. An additional insured is an actual insured under the other party policy, and that status exists only through a policy endorsement or a blanket additional insured provision.
What are the Virginia contractor license class thresholds?
After the 2025 amendment, Class A is 150,000 dollars or more per contract or 1,000,000 or more annually, Class B is 30,000 to under 150,000 or 250,000 to under 1,000,000 annually, and Class C is over 1,000 and under 30,000 or under 250,000 annually. Water well drilling and landscape irrigation contractors remain under the older figures.
Does Virginia require contractors to carry general liability insurance?
Not to hold a license. The Board for Contractors regulations do not list general liability among the licensing requirements. General contractors, owners and county contracts almost always require it, so in practice anyone bidding real work carries it.
What happens if a Virginia contractor works without the right license class?
It is a Class 1 misdemeanor with fines up to 500 dollars per day of violation, and the contract is generally unenforceable by the unlicensed contractor, meaning you may be unable to sue for payment on work you completed.
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