A primer on insurance certificates

A primer on insurance certificates -

The following post is presented by Andrew G. Gordon Insurance, one of our members Renaissance Alliance. It offers a primer on the ins and outs of insurance certificates. More business topics Blog Commercial Insurance .
A certificate of insurance is usually a single page document that lists the insurance policies for the insurance program of a company. Certificates of insurance are usually necessary when a company hires another, and wants to know if the company has liability insurance. It is the default document to transmit an interested party and what type of insurance which amounts to another insurance company.
A standard certificate will list the general liability, auto liability, excess liability, and workers compensation policies. They also provide the name of the insurance company and effective policies and expiration dates. The latter is most important, especially if the expiration of an insurance policy overlaps the time a job is done. Thus, it allows the certificate "holder" or company engaging another company, when insurance subcontractors is exhausted. It is an ideal management tool to verify the assurance of others in business.
Construction Industry
In the field of construction, insurance certificates are provided for important reasons of cost. If an uninsured subcontractor causes damage to a job site resulting in a loss, the insurance general contractors can end up paying a claim for negligence of the contractor. Thus, when a general contractor engages the services of a contractor who does not have insurance, the insurance company of the general contractor will usually charge premium for uninsured subcontractor when they learn this audit at the end of the year. The certificate is therefore an important document for the prevention of such a charge to land on the insurance of general contractors.
Additional Insureds
Certificates also convey other important information that may be present between the working groups. One of the most common is called the additional insured. The additional insured status is another step toward requiring subcontractors to assume full responsibility for their actions on a construction site, and the insurance certificate can confirm that special status. Another additional insured scenario is common with landlords and tenants, and service providers such as landscape.
Another feature of the policy may be necessary when different companies collaborate on a project, is the lifting of the subrogation agreement. The certificate also provides a check box to recognize whether waiver of subrogation exists between the parties.
The certificates are applied in many other business relationships. A landlord should require all tenants to have liability insurance so that a continuation of the actions of a tenant does not return to the owner. The insurance certificate can be used to document compliance with this provision.
Another important consideration insurance disclosed a certificate on insurance of accidents. Massachusetts business owners can opt to have the workers' compensation coverage to eliminate the cost of including workers compensation themselves. An insurance certificate can indicate if the owner has chosen or not.
Confirmation of coverage
When a company such as a bank wants to confirm whether there is insurance on the property of a business liability insurance certificate is not the right document but is an insurance binder, or evidence of a form of property insurance. These are much like people noninsurance but there is an important distinction :. These other forms generally do not cover liability insurance
Businesses that collect many insurance certificates often organize these certificates by expiration date of their insurance subcontractors. Thus, they will know when the insurance subcontractor ends to know when to seek a replacement certificate
An important caveat :. A certificate shows that insurance in place on a given day. There is no specific obligation by the insurer or agent or broker to inform the holder of the certificate, if the subcontractor provides their insurance. Generally, when the old claims make their way back to a general contractor, insurance often expired subcontractors.
Download a sample certificate which we have highlighted some of the most important aspects of this form in search of cryptic insurance. Or see a whiteboard explanation and examples of how to read these and what to look for.

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