Certificates Of Insurance Best Practices
A certificate of insurance is a legal document that contains information about a business. The certificate must be accurate and match the information that was provided to the state when the business was registered. A business certificate must also include the name of the insurance company and its contact information. This information is used by readers of the certificate to confirm coverage and contact the insurance broker team. The basic principle of insurance is that if you make a claim, the insurance company will pay the claim.
Certificates of insurance should also state if there are any special insurance requirements in the commercial agreement. In addition, the certificate must name the holder as additional insured. The business owner should consult with counsel and the risk management group to understand which endorsements are best for their business. For example, if a business hires a construction company to complete a home improvement project, it should have the contractor and subcontractor sign additional insured endorsements. This additional insured endorsement will help protect the business owner from any liability lawsuit that arises from the project.
In addition to obtaining certificates of insurance from vendors, the best practice is to maintain records of these policies. Accurate records of insurance policies are critical, as incomplete records or misplaced certificates can lead to compliance problems. In addition, policies may have expired, jeopardizing compliance.
Certificates of insurance should list the names of the policyholder, mailing address, and contact information for the insurance agent or agency. The certificate should also list the type of insurance policy and its limits. Having this information at hand can make the process much simpler. A certificate of insurance can also be an excellent tool for comparison shopping.
The certificates of insurance can be delivered in different formats. Typically, they are published using standardized forms developed by the insurance industry. However, certificate providers and requestors may also choose to use a customized form or develop their own. Nevertheless, this is only a good idea for large-scale projects.
Certificates of insurance should not contain misleading or false information. The certificate should also not amend or modify the terms of the insurance contract or its coverage. Furthermore, it cannot confer extra rights. In addition, it should not list policies that exclude pollution coverage. These types of policies are usually misrepresented because the insurance specification is tight.
A certificate of insurance should not be mistaken for an insurance policy. While it does not create a legal contract between the certificate holder and the insurance company, it confirms that the insurance company has coverage at the time of the certificate’s issuance. In addition, a COI does not guarantee that the insurance provider will continue to provide coverage. It also does not guarantee that the coverage limits will remain unchanged because of claims or other circumstances.
A certificate of insurance should be carefully reviewed by an insurance professional. If you cannot identify the exact insurance coverage, you may be putting your business at risk. Fortunately, there are several tools available to track and review certificates of insurance. For example, BCS offers a self-service option that helps you manage your certificate of insurance requirements. Another solution offers a full-service option that involves a team of experts to verify and correct certificates of insurance.
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