Many companies rely on certificates of insurance (COIs) as evidence of coverage to present to third parties as proof. Unfortunately, not all COIs provide accurate information.
As an example, COIs must not list coverage limits that differ from those listed on the policy itself – otherwise there can be serious repercussions. Here are a few key points to keep in mind when managing COIs:
Policy Limits
Accuracy in choosing policy limits on a certificate of insurance (COI) policy is both vital and can protect your insured. If their limits exceed what was certified, it could leave them exposed in court should an incident occur and result in higher legal fees, deductibles or even worse penalties for claims being brought forward against them.
Limits should always correspond to those stated on a policy because most insurers will only cover up to what’s shown on a certificate of insurance (COI). If a claim exceeds these limits, an insurer could face legal action for not covering it adequately; so never issue a COI that indicates higher limits than what are actually in force on an actual policy.
While policy limits are an integral component of a certificate of insurance (COI), premium amounts should not be listed within. Such information often remains confidential to the insured and should not be shared publicly.
Insurance brokers are frequently requested to provide certificates of insurance as part of business transactions. Third-parties often request them in order to ensure the insured has sufficient protection prior to entering into partnerships or contracts.
Certificates of insurance are documents which verify the existence of insurance coverage, listing specific details about it such as coverage limits and expiration dates. They are typically signed by insurance providers to serve as evidence that certain entities or individuals are covered. Occasionally additional insured may also be listed on such policies.
Many businesses require contractors and other parties to submit a certificate of insurance before hiring them to perform work on their property, manage assets or take over care and custody duties for them. They use this certification as part of the hiring process to verify if they can handle any claims that might arise during work on their assets.
Policy Expiration Dates
Assuming you do not utilize an automated certificate of insurance management system that notifies you of expired policies, insufficient coverage or policy lapses, it is wise to review every certificate of insurance and ensure it contains all of the pertinent details in order to prevent miscommunication, delays, unintended losses and noncompliance issues. This can help avoid potential misunderstandings, delays and noncompliance issues that could otherwise occur.
COIs provide a list of all relevant insurance coverage and its limits, insurers that provide it, as well as insured parties (known as “certificate holders”). You should verify that their names on this list match those you do business with as well as that their policies meet your requirements.
There is also a section for outlining operations, locations or vehicles at which an insured has a presence; and sometimes there’s also space available to add other information if desired; additional insureds or subrogation waiver waiver are other common examples of additional requests that might appear. Lastly, there should be an authorized representative from an insurance provider who issued the COI to sign it as well.
Before hiring any third-party vendors or subcontractors, it is advisable to obtain their Certificate of Insurance (COI). This will give you proof that they complied with your contract terms while protecting you against liabilities for losses, damages or injuries suffered during your project.
Requesting to become an additional insured on a vendor’s insurance policy may seem appropriate; however, for your own protection it would be prudent to also request a Certificate of Insurance (COI). This will allow you to check their coverage limits as well as any applicable deductibles or coinsurance amounts.
Be mindful that a Certificate of Insurance only represents the current insurance coverage at the time of its issue, which could have changed since then. Therefore, before engaging with an insured party it is wise to request and review their current COI in order to assess if they meet your standards – otherwise you may need to negotiate or terminate their relationship.
Policy Exclusions
Although COIs verify an insured has the policies they claim, they don’t guarantee they will remain active over time. This should be made clear when anyone requests a certificate of insurance; these certificates provide only an instantaneous snapshot of what your policy looks like at that particular moment in time.
Due to this limitation, COIs only verify the policies at the time they issued the certificate. If they become inoperative later in a contract term, contracting parties risk becoming vulnerable without adequate protections in place; hence most COIs include an advisory clause reminding those requesting one that it is their responsibility to ensure all policies remain in force throughout.
COIs contain an essential section that lists policy types, policy numbers, coverage limits and expiration dates of all liability policies listed on them. A company requesting one will compare this data against their requirements to ensure all required coverages exist; additionally this section should note additional insureds or waivers of subrogation or any custom terms; any information which appears whited-out could indicate alteration to the document.
An COI provides general information, as well as specific identifying data about its policyholder and insurer, along with contact details in case there is an unexpected change to coverage or an insurance dispute arises. This detail can be particularly valuable in case the certificate must be reissued quickly due to unexpected coverage changes or an ongoing claim dispute.
When dealing with third parties that require certificates of insurance (COIs), it’s essential that you understand their individual requirements. By taking the time to understand what each party needs from you, taking this extra step could save both time and money in the future. Reviewing COI requirements before entering contracts will also help avoid surprises down the line.
Policy Changes
COIs provide basic insurance information, but may be misleading to those who fail to examine them closely. A certificate of insurance only serves as an accurate snapshot of policy details as they existed on the day it was issued; it does not alter or amend any terms and conditions listed there, leaving those relying on COIs as verification to face possible challenges when filing claims or lawsuits against their insurer.
Certificates of insurance often list a company named as additional insured on their general liability policyholder’s general liability policy, however this doesn’t necessarily equate to their being covered if an incident arises – in fact it could just be an umbrella addition covering the organization as a whole. To make sure they’re covered adequately the company requesting the certificate should request a copy of their underlying policy to see exactly what coverage exists.
COIs provide valuable information, including a box that reads “SUBR WVD.” When checked, this indicates that the policyholder’s insurance provider will waive its subrogation rights against specific parties – typically including themselves – who may have contributed to an incident without being at fault themselves. This helps avoid claims for incidents where neither the certificate holder nor their named insured are to blame.
Last but not least, a certificate of insurance should include a section listing any pertinent policy endorsements (additional riders and amendments to existing policies). For instance, if a business purchases hired and non-owned auto liability coverage with their general liability policy, this must also be included as an add-on on their COI certificate.
Finalizing a Certificate of Insurance requires contact details for its producer as well as a disclaimer stating, “This Certificate is issued solely as informational purposes and should not be relied upon as authoritative for coverage provided under policies listed herein.” If an independent insurance broker issues the document, their license number should also be listed here.
