A brief explanation of insurance certificates

Anyone who has worked as a subcontractor will be required to produce a ‘certificate of insurance’ or ‘certificate of insurance’ at some point. A certificate is nothing more than a snapshot of your current insurance coverage at the time it is issued. It should show your current limits of liability, the insurance company providing coverage, and the period for which coverage exists. In addition to applying for a certificate, many contracts require your client to be added as an additional insured. This would enable your coverage to protect you and your client in the event of a claim. Additional insured status may also limit your client’s possible subrogation by your insurance company. It would be unusual to subrogate a party to the contract. Additional insured status is nothing more than a transfer of risk to another party. Problems arise when you have signed a contract that requires certificates to be changed or additional notes added to your coverage, especially when you make these requests after the work is completed. It is imperative that you read any contract before signing it and confirm with your insurance company that you currently meet or can meet the insurance requirements set out in the contract before work begins.

Contracts usually require you to fulfill one or more of the following requests; remove text on the certificate, add specific forms, add main contractor and/or owner as additional insured and/or add text to the certificate. Your client tries to limit his liability. Providing an insurance certificate to the general contractor/building owner does not change the insurance contract and as such the Accord 25 01-08 certificate contains several statements that try to make very clear what a certificate does.

“This certificate is provided for informational purposes only and does not confer any rights on the certificate holder. This certificate does not modify, extend or alter the coverage provided by the policies below.”

“The insurance policies listed below have been issued to the insured named above for the specified policy period. Notwithstanding any requirement, condition or condition of any contract or other document in respect of which this Certificate may be issued or may apply, the insurance provided by the policies described herein are subject to all terms, exclusions and conditions of such policies. The aggregate limits shown may be reduced by paid claims.”

“The insurance certificate on the back of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer and the certificate holder, nor does it alter, extend or alter the coverage provided by the policies stated thereon.”

An insurance policy is a contract between the insurance company and you, and unless the policy has been approved by the company, any additional or deleted text on a certificate will not affect a potential claim. Some contracts require the wording “this insurance is primary and non-contributory” to be added. If your client was added as an additional insured, a current CGL policy with the appropriate additions would provide primary coverage without the wording. Some ask for the words “attempted mail” to be deleted; most companies only message those who have been added as an additional insured. Some states have made it illegal to change a certificate. It should also be noted that most case law supports the idea that a certificate is provided for information only and is not part of an insurance contract.

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You may receive requests to add a specific form to your policy. In an effort to limit liability, insurance companies have intentionally limited coverage to additional insured persons. In an effort to get this coverage back or out of ignorance, your customers are asking for old and outdated forms to be added to your coverage. Usually they ask to be added as an additional insured using form CG 2010 11-85, this form provides cover for “completed surgeries”. Old forms may violate current liability policies, and in some cases, businesses are not allowed by law to use these forms. What one form did now needs two, CG 2010 10-01 and CG 2037 10-01.

A simple understanding of what a certificate does will help you meet your contractual obligations. A certificate of insurance does not change your policy. Unless your policy has been approved (amended) by the insurance company, your needs have not been met. In some states, it is a violation of the law to change or amend a certificate of insurance. It is imperative that the correct and current forms are used, in most cases your agent can explain to your client why one form should be used instead of one that may have been requested. Read your contract; even though you may have provided an acceptable certificate and added your client as an additional insured, you can still commit to something not provided by your general liability policy.