Certificates of Insurance Primer

Marcia BernerProperty & Casualty/Surety, Program DirectorACORDTwo Blue Hill Plaza, 3rd FloorPearl River, NY 10965(845) 535-6453Email: mberner@acord.orgWebsite: www.acord.org 12.23.08 - V

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•Who is ACORD?

•Certificates of Insurance Primer

ACORD Standards improve efficiency

• A single document/format that can be used by multiple trading partners

• A single document that can be used for multiple pieces of business

• Minimizes redundancy, keystrokes, and increases profitability

Compliance

ACORD works to help with implementation

ACORD provides training & education

ACORD provides advisory services

ACORD 24: Certificate of Property Insurance

ACORD 25: Certificate of Liability Insurance

What is a certificate of insurance?

• A Certificate of Insurance is a document that provides information about insurance policies

• Millions of Insurance Certificates are issued every year, primarily in the United States. The majority of certificates are issued upon policy renewal to provide this information to third parties. These third parties are known as certificate requestors/holders.

• Certificates list one or more lines of insurance, the limits associated with those coverages and the insurer providing the coverage

• Every certificate must include the following 3 key provisions:– Information Only Provision

– Policy Governing Statement

– Notice of Cancellation

Why do brokers and agents issue Certificates of Insurance?

• Their Client requires certificates of insurance because:• They are the tenant in a building, and owner is requesting

evidence of liability insurance• They are the mortgagor of a building, and owner is

requesting evidence of property insurance• They leased equipment and the owner of equipment wants

evidence of property insurance while equipment is in possession of our client

• They need evidence of workers compensation insurance in order to obtain a contract to work for someone, i.e. security guard, temp services, contractors entering job sites etc.

• Often the delivery of a certificate is time sensitive and is critical to the completion of a commercial transaction

General Description – what is usually included on a certificate

• Date of issuance• Producer (agent/broker)• Insured• Insurance Companies providing the coverage• Type of insurance• Policy numbers, effective and expiration dates• Limits carried• Description of operations/activities to which the certificate

pertains• Certificate holder/requestor• Cancellation provision

A Certificate of Insurance is NOT an Insurance Policy

• No coverage is provided, endorsed, amended, extended or altered in any way by the issuance of any Certificate to a Certificate Holder. Only an endorsement, rider or amendment to the policy can effect changes in coverage, such as Additional Insureds, Waiver of Subrogation or Loss Payee

• Reference to a contract between the client and a third party on a Certificate does not provide coverage. Such coverage is provided only to the extent that it is contained in the subject policy or endorsed thereto.

• The right to receive notice of cancellation is only provided within the policy terms and condition.

Information Only Provision

• “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. This Certificate of Insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the Certificate Holder.”

Policy Governing Statement

• "This is to certify that the policies of insurance described herein have been issued to the insured named herein for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which the Certificate may be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, conditions and exclusions of such policies. (Aggregate) Limits shown my have been reduced by paid claims.“

Notice of Cancellation Provision

• "Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.”

Only current editions of any ACORD form can be used

• Older ACORD Certificates that have been withdrawn from our forms library are obsolete and can be non-compliant. It is imperative that all ACORD members to use the most current and compliant versions of our forms.    

• As is true for all ACORD forms, we carefully monitor and revise our forms as regulatory requirements change, and file them for state insurance department approval in states where filing is required, and have done so for the 2006 versions of the 27 and 28.   These forms are undergoing technical changes and will be re-released as 2009 editions later this year.   

• Any earlier editions of our forms that have been withdrawn from the forms library are not kept up-to-date as to regulatory requirements, and therefore should not be distributed for use.

dcarroll@acord.org

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