Our clients frequently request certificates of Insurance. Certificates are often a source of confusion. In an effort to shed some light on this illusive document, I have outlined a few keys points pertaining to certificates of insurance.
What is it?
A document that verifies your insurance for specific coverages [for example Property, General Liability, Auto Liability or Workers Compensation] and coverage limits with your insurance company’s name for a stated period of time [the policy period]
Who requests them?
- Clients/Customers – companies, people or organizations you agree to perform a service for or provide a product to
- Owners of leased equipment
- Banks/Financial Lenders
The Insurer/Agent will try, but is not legally obligated, to notify the certificate holder in the event of cancellation of coverage within the stated amount of time [normally 10 to 30 days].
Certificate Holder vs. Additional Insured:
The Certificate states to the Certificate Holder that the Named Insured (you) has the specific coverage and limits listed on the certificate. It does not grant insurance coverage to the certificate holder. It only states that you have the specified coverage.
An Additional Insured is an entity that is not automatically included as an insured on the policy. Therefore, the Certificate extends a certain degree of insurance coverage to the Additional Insured on your insurance policy. A contract or lease number is generally referred to on a certificate to specify the reason the Certificate Holder is named as an Additional Insured (i.e. “Certificate Holder is named as an Additional Insured with respect to the leased premises at 123 Main Street, Anytown, USA.”)
It is important to have your agent review the insurance sections of your contracts or lease agreements prior to signing the agreement to be sure that the insurance requirements in the document coincide with your company’s insurance policy coverage. The Certificate of Insurance clearly states that the “certificate does not amend, extend or alter the coverage afforded by the policies.”