Review Certificates of Insurance to Help Minimize Risk Liabilities

By Daniel Bagliore

Any site risk mitigation strategy should include a procedure to track and review Certificates of Insurance (COI). The appropriate site manager should ensure that a COI is collected from any vendor and contractor working on your site as well as any tenant with a renter’s insurance policy.

The COI is usually issued by an insurance broker on an Acord 25 (Certificate of Liability Insurance) form to confirm the existence of an insurance policy and relay some of its basic terms.

You should review the COI as provided to verify, at a minimum, the following pertinent information:

1. Issue Date: The date the COI was issued. Remember, the COI is merely a snapshot in time and reflects policy information in effect as of the date of issuance. Be aware that the policy may lapse or the terms may change following the date the COI was issued.
2. Producer: The name of the insurance broker or carrier that issued the COI and its contact information.
3. Named Insured: The entity that purchased the insurance policy, pays the premium, and directly receives the benefits of coverage.
4. Insurer: The insurance carrier providing the specific coverage to the Named Insured.
5. Type of Coverage and Policy Period: The Acord 25 provides information for General Liability, Automobile Liability, Umbrella/Excess Liability, Workers Compensation, and other insurance policies (as applicable) and includes policy start and end dates for each coverage type.
6. Limits: The maximum amounts the insurance carrier will pay to settle a claim on a per-occurrence and aggregate basis for the policy.
7. Additional Insured: With the exception of workers compensation, you should confirm that your entity is listed on the COI as additional insured to ensure that the insurance coverage of your vendor, contractor, or tenant extends to your property in case of a loss.

Track the expiration dates so you can require evidence of renewal. A contractor continuing to work on your site following a lapse in insurance could place your site in serious financial jeopardy.

Keep in mind that the COI is not an insurance policy; rather, it is an abridged summary of the underlying policy and may not necessarily create coverage. The COI does not confer any insurance rights on the additional insured and may not be legally binding. In fact, the Acord 25 includes the following disclaimer:

This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not affirmatively or negatively amend, extend or alter the coverage afforded by the policies below. The certificate of insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder.

The COI will provide only limited information from the actual insurance policy. Important information from the policy (such as undisclosed policy exclusions) may be omitted from the COI or the COI may not accurately reflect certain information contained in said policy (for example, the legal name of your organization may appear correctly in the COI yet is misrepresented in the additional insured endorsement).

Some courts have ruled that, in the event of a loss, exclusive reliance upon a COI (especially when issued by an insurance broker without the knowledge or consent of the insurance carrier), which by itself may not confirm coverage, is unreasonable and there is an expectation that the additional insured will at least attempt to acquire and review the underlying policy, which is the controlling document.

Therefore, if not already a contractual obligation, you should obtain from your tenants, contractors, and vendors a copy of the actual insurance policy to, among other things, confirm its existence, review its terms and the inclusion of the additional insured endorsement for your entities, and note any policy exclusions. Once an incident occurs or claim is made, the insurance carrier or broker may be less cooperative and policy acquisition could prove elusive.