Certificates of Insurance Overview

Source: IIABA Virtual University

  • A certificate is not a contract, but a snapshot of coverages and policy terms at the time they are issued.

  • ​You are not obligated to honor a certificate request from anyone. There is nothing in the insurance contract that requires compliance to a request from the insured or third party. Of course, the failure to do so may result in losing the account. Having written policies on when to decline to issue certificates and applying them without exception gives your agents something to fall back on and soften the blow of having to say “no” to clients.

  • Pending cancellation is a great reason to decline to issue a certificate of insurance.

  • In the case of a pending cancellation, be sure to list the pending cancellation date as opposed to the policy expiration date for the certificate expiration date. It would likely cost significantly more for your E&O carrier to settle with the certificate holder’s property carrier if the insured doesn’t renew and something happens to trigger a claim on coverage that is no longer valid than it would to reissue the certificate when the insured inevitably renews.

  • Providing notice of cancellation to certificate holders is less of an issue that it used to be because the latest ACORD form removed the “will endeavor to” language because they knew that carriers weren’t doing it. Instead it says that cancellation notices will be delivered in accordance with policy provisions, which generally means the named insured and any additional insureds.

  • In most cases with wholesalers and E&S lines, the wholesaler should be issuing certificates.

  • With standard lines, it is appropriate for you to issue the certificate, but you should always send a copy of the certificate to the insurer, even if they have stated that they don’t want them.

  • You should NEVER EVER modify an ACORD certificate or policy form! It is a violation of copyright law to modify any ACORD forms without a special licensing agreement.

  • Some contractors are refusing to accept the current editions of ACORD forms, insisting that agents issue past editions instead. You should not do this because you are putting yourself at high risk of misrepresenting coverages.

  • Be wary of non-ACORD forms. Do not issue one without the express permission of the insurance company, and even then it is preferable to have the insurer do it. Do not issue one with language that incurs liability for the agency to do something not called for in the underlying policies. Do not issue one that is a clear rip off of the ACORD form.

  • Certificates should not be used to quote any wording that amends a policy unless the policy itself has been amended! As an agent you have no authority to change the insurance contract or issue a certificate that indicates terms and conditions not provided for in the policy. (Lenders and other third parties are constantly asking agents to do this!)

  • You can’t really say additional insured status is provided on a “primary and noncontributory” basis with absolute certainty.

  • Don’t sign any “agent affidavits” attesting that an insured’s insurance program complies with a contract the insured has signed with that party. Chances are, your customer has no idea of the difference between CGL contractual liability and an indemnity agreement, and it is impossible to say that “all claims” are covered.

  • Certificates should not be used to waive rights.

  • Certificates should not be used to quote wording from a contract.

  • Certificates should not be used in place of an endorsement.

  • ​Remember that just like any other insurance policy, your E&O policy doesn’t cover everything that could happen. Read your policy, but it likely doesn’t cover contractual liability, fraud or intentional misrepresentation, all of which could come in to play with the mishandling of certificates of insurance.