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NY Business Insurance News – Understanding The Purpose Of Certificates Of Insurance

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When stores lease real estate spaces or construction firms win jobs, the party on the other end usually has a very specific set of requirements.

One of the main requirements is that the tenant, contractor or borrower show proof that he or she has adequate insurance.

Copies of insurance documents may be sufficient. But, not all companies want copies of documents sitting around.

A very helpful substitute for document copies is a certificate of insurance.

How it works

A certificate of insurance is a standardized document that will show:

  • The types of coverage the policyholder has purchased
  • The effective and expiration dates of the policy, and
  • The limits of liability coverage.

In short, it provides evidence that a company is insured. This item is simple to create and store. Unfortunately, not all firms and insurance buyers fully understand them.

ACORD constructed the forms that are most commonly used. According to their instructions these certificates are intended for informational purposes.

When some businesses receive these certificates, they think the items are contracts. But the certificate is simply a snapshot of insurance provisions. It indicates that a policy exists, but it is not the document that actually provides coverage. The only document that actually provides coverage is the policy itself.

When you need one

Companies and individuals that hire contractors want to be certain that they will not be held liable for injuries, damages or substandard work. For this reason, they will frequently request to see a certificate of insurance.

If your company has been contracted to do work and is asked for proof of insurance, we can provide you with a certificate of insurance if you have purchased coverage through us.

Many businesses want these certificates to have specific terms, phrases or words. But NY insurance agents have legal boundaries for such requests. The only way agents can add wording to a certificate is if the listed policies contain that wording. Changes are not always allowed.

Many states prohibit agents from handing out certificates implying provisions that are not included in the policies.

For example, a certificate holder may want the item to state that coverage is primary and noncontributory. However, policies that do not reflect such information cannot have certificates that indicate otherwise.

Before you sign papers for leases or construction jobs, you should verify coverage requirements with us.

Don’t be alarmed or taken off guard if a client requests the addition of their name or business as a certificate holder on your certificate.

Oftentimes, this is easily accommodated, but you must submit a request to your insurance agent so that they can review and issue your certificate accordingly.

Act now

Don’t wait until a client asks you to provide evidence of business insurance coverage. You can be proactive and have your document ready.

When working with a new client, the last thing you want is to hurt your company’s reputation and lose clients because you have not requested your insurance certificate in advance.

If you don’t already have one, call us today.

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