A fleeting Explanation of Certificates of Insurance

A fleeting Explanation of Certificates of Insurance

Anyone that has worked as a subcontractor has been required at some point in time to provide “proof of insurance” or a “certificate of insurance.” A certificate is nothing more than a break shot of your current insurance coverage at the point in 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 the request of a certificate many contracts require that your client be additional as an additional insured. This would allow your coverage to protect you and your client in the event of a claim. Additional insured position may also limit possible subrogation against your client by your insurance company. It would be uncommon to subrogate against a party to the contract. Additional insured position is nothing more than a move of risk to another party. Problems arise when you have signed a contract that requires certificates to be alternation or additional endorsements to be additional to your coverage, especially when you make these requests after the work has been completed. It is imperative that you read any contract before you sign it and confirm with your insurance provider that you either currently meet the insurance requirements set forth in the contract or can meet them before work starts.

Contracts usually require that you meet one or more of the following requests; delete wording on the certificate, add specific forms, add general contractor and/or owner as an additional insured, and/or add wording to the certificate. Your client is trying to limit their liability. Providing the general contractor/building owner a certificate of insurance does not modify the insurance contract and as such the Accord 25 01-08 certificate contains several statements that attempt to make very clear what a certificate does.

“This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.”

“The policies of insurance listed below have been issued to the insured named above for the policy period indicated. despite any requirement, term or condition of any contract or other document with respect to which this certificate may be issued or may pertain, the insurance afforded by the policies described herein is unprotected to all the terms, exclusions and conditions of such policies. Aggregate limits shown may have been reduced by paid claims.”

“The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), empowered representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.”

An insurance policy is a contract between the insurance company and you, and unless the policy has been endorsed by the company, any additional or deleted wording on a certificate has no bearing on a possible claim. Some contracts require that the wording “this insurance is dominant and non contributory” be additional. If your client has been additional as an additional insured, a current CGL policy with the correct endorsements additional would provide dominant coverage without the wording. Some request that the words “endeavor to mail” be deleted; most companies will mail notice only to those additional as an additional insured. Some states have made it illegal to modify a certificate. It should also be noted that most case law supports the concept that a certificate is provided for information only and is not part of an insurance contract.

You may get requests to add a specific form to your policy. In an attempt to limit liability, insurance companies have deliberately limited coverage provided to additional insureds. In either an attempt to get this coverage back or out of ignorance, your clients ask that old and outdated forms be additional to your coverage. Usually they ask to be additional as an additional insured using form CG 2010 11-85, this form provides “completed operations” coverage. Old forms can conflict with current liability polices and in some situations companies may not be permitted to use these forms by law. What one form used to do now takes two, CG 2010 10-01 and CG 2037 10-01.

A simple understanding of what a certificate does will go a long way toward helping you meet your contractual obligations. A certificate of insurance does not modify your policy. Unless your policy has been endorsed (changed) by the insurance company your needs have not been met. In some states it is a violation of the law to modify or amend a certificate of insurance. It is imperative that correct and current forms be used, in most situations your agent can explain to your client why one form must be used as opposed to one that may have been requested. Read your contract; already though you may have provided an permissible certificate and additional your client as additional insured you could nevertheless be binding yourself to something that is not provided by your general liability policy.

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