If you are an insurance agent or a small business owner, you are aware of certificates of insurance and not only that, but you also realize that providing them with all the accurate verbiage, isn’t always as easy as it sounds. Whether you are providing one or requesting a COI, it’s important to recognize the essential purpose for which it’s designed.
The Key Purpose of a Certificate of Insurance
A certificate of insurance is a document that confirms there is a liability insurance policy along with other facts such as the liability limits, policyholder’s name, and effective dates of coverage, to name a few. Business owners need to supply a COI any time they are bidding on a job or hired to do work or they most likely won’t get the job. Those entities asking for a certificate don’t want to assume any risk of liability for injuries/accidents generated by the contractor.
When an insurer is asked to send the certificate of insurance to the requesting entity, the agent may have to do some additional work to ensure the wording pertaining to the job falls within the legal guidelines and that he/she may have to endorse the insurance policy before sending. This is where it can get tricky.
2 Typical Concerns that May Arise out of Certificates of Insurance Requests
When a certificate of insurance is requested or submitted pertaining to a job being performed, certain insurance verbiage may need to be added and furthermore, additional insured information may need to be added or endorsed. Below are 2 issues that can create time delays and issues if you aren’t careful.
Additional Insured- Any entity asking to be an “additional insured” has a vested interest in the job and is basically asking for the liability insurance coverage (of the named insured) to extend to protect them against covered losses that may happen due to the policyholder’s negligence, such as faulty work or injury happening during the scope of the job.
Keep in mind that some business owners’ policies automatically protect additional insureds by endorsement, while others may need to be added for an additional cost by an endorsement. If the insurer must endorse it, it may take longer than expected to receive the certificate of insurance.
Description of Operations- The description of operations is intended to detail the specific job being done, but over the years, many people took advantage of this section of the certificate and were requesting to add extensive wording/information that wasn’t even accurate or legal. Now, stricter guidelines are being enforced and those violating the law can expect to be penalized with legal fees. When there is a request for certain language to be added to this section, the insurers and small business owners need to ensure the wording is clearly written and within legal boundaries.
We, at Cameron Group Insurance, can assist you today with any questions or concerns you may have concerning certificates of insurance. Just remember that if you are having any work done on your property, you should request a certificate for your own protection. If you are a small business owner, you should provide it in a good faith effort to show you are properly insured. We can assist you with all your New York insurance needs. Don’t wait! Call us today at 845-627-2130.