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What Is A Certificate Of Insurance | Insurance 101 - YouTube
Channel: ALLCHOICE Insurance
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- What is a certificate of insurance
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and what are the components that make up
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a complete certificate of insurance?
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We'll discuss all of
that on today's video.
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Hey folks, Jack Wingate here
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and on this channel, we
help individuals, families,
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and businesses save
money on their insurance,
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help you understand
insurance a little bit better
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and let you know what's going
on in the insurance industry.
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And if you are in construction,
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you have heard at least about
a certificate of insurance.
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In fact, more times than not
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we find with smaller
contractors whether it be
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plumbing contractors,
electrical contractors,
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landscapers, heating and
air, carpenters, you name it
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more times than not the
small contractor comes to us
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because they're bidding
on a job or they've just
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gotten a job and the person
they're doing the work for
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is requiring a certificate of insurance.
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So, what is it?
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Simply put, a certificate insurance shows
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or proves that a certain
person has insurance
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at a certain period of time.
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It's actually a legal document
that shows this proof.
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So what makes up a valid certificate?
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There are a number of things that you have
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to be aware of for a certificate
of insurance to be valid.
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The first part is this, in
the top right hand corner,
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you are going to see a
date that should always be
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a current date.
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The top right hand corner
date shows the date
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the certificate is being produced.
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The next component of a valid
certificate of insurance,
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as you move down the page,
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you're gonna see in the left hand corner
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up underneath where it shows agency,
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you're gonna see what should be your,
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if you're the one
requesting the certificate,
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if it's your insurance, it
should be your legal name.
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Whether it be you're doing
business as a person,
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as an entity, you name it should
have your name and address.
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Then as we scan to the
right on that same document,
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you are gonna see a list
of the insurance carriers.
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Now on a valid certificate,
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you should have the name
of the insurance carrier,
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and then beside that, the actual NAIC code
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for that carrier.
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Every carrier has an NAIC
code associated with it.
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If you do not see that NAIC
code, you need ask the question.
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All right, as we move
down, this is where we get
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into the meat of a
certificate of insurance.
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You are going to see
listings in rows and columns
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for the following.
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The first row deals with
general liability insurance.
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And there are a number of
boxes on here to check,
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but you have your general
liability component.
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As you move over, you're
gonna see some columns.
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These can be checked for
waiver of subrogation,
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additional insurance, just to check box.
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Then as you move further to the right,
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you're gonna come across
the policy number.
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This is where your policy
numbers should reside.
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Again as we move over to the right,
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you're gonna see the actual effective
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and expiration dates of that policy.
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Here is where it is crucial.
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This is saying, this
document is saying that
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for that policy, you have
coverage active coverage
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for that policy period,
starting on the effective date,
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ending on the expiration date.
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And then to the far right
that's where your coverages
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are gonna be listed.
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So if you have a million
dollars of a per occurrence
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general liability, it's
gonna be listed there.
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The next row down, you'll look
at auto insurance liability.
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And this is again, same
thing moving forward,
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policy number, effective
dates, policy coverage.
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The next one down is gonna be for umbrella
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or excess insurance.
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Same thing as you move from left to right,
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you're gonna have the
coverages or the checkbox
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for what types of coverages,
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the policy number effective
and expiration dates,
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and then your coverage.
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And then finally, you're gonna end up,
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not finally, the main next
one will be worker's comp
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listing from left to right.
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And then there's another column,
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this will be where we would
put in coverage for things
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like professional liability
that's not included up above
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or installation floaters, what have you,
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that's where that'll happen.
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Now, this is the next part down is called
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the description of operations box.
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This is where things get
a little hairy sometimes
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when someone is requesting
a certificate of you.
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You let's say you're bidding on a job
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and the person you're
working for or bidding to
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hands you a document, we
want these things listed
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on the certificate of insurance.
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And they'll list out a
number of things with wording
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and a lot of times the wording
that they're asking for
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really should not be put in
that description of operations.
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And you may think, well,
what's the difference,
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I've got coverage,
everything should be good.
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Well, sometimes the legal departments
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for these other parties
are trying to put language
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into that certificate that doesn't exist
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in the actual contract.
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So, a good agent when they
see special wording coming in
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will take a look at it,
make sure that your policy
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has that coverage or that language,
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or they'll either endorse
the policy to make that
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or tell you right off the bat,
we cannot do this or that.
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It's not that your policy isn't good,
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it's just sometimes the person
requesting a certificate
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is trying to look out
for their best interests
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and get coverage or find coverage,
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or find a way to get someone in a lawsuit
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when they know that coverage
may not exist on that policy.
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So the description of
operations is where we see
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a lot of clients come to
us and have questions.
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Well, why can't you do this?
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Why can't you just say this?
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What's the big deal?
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The big deal is once again,
it's a legal contract
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and if the agent puts something in that
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description of operations
that is not on the policy,
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then the agent himself or
herself can be sued in a lawsuit.
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Then finally, as we move
down and here's what
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we see a lot from our clients,
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and we try to help this along
with our online certificate
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request form, the bottom left hand corner
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is the spot for the certificate holder.
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In order to have a valid certificate,
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you must have a certificate
holder and we need the full name
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and the address for
the certificate holder.
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If we don't have that, it's
not a valid certificate.
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We actually have people
request all the time,
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well, just give me a sample certificate.
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A good agent will never give
you a sample certificate
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of your coverage,
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the reason being is that
certificate can be doctored
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by someone else.
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Let the agent produce certificates
and send to the people
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who are requesting for you.
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The final element of the
certificate insurance
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is on the far right hand bottom corner,
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and this is the signature.
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The agent must sign that
certificate for it to be valid.
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So, let's recap the
really the main points.
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Let's make sure in the
top right hand corner
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that we have a valid date.
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As we move down let's
make sure that your name
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or company is listed properly.
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Let's make sure that the carrier listed
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with the NAIC numbers.
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Let's make sure that we have
valid dates and policy numbers
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for the certificate.
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As we move down, let's make sure that
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description of operations
says just what's in the policy
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and nothing more.
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And then finally is to make
sure the certificate holder
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is listed correctly with
everything they need,
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and then that the certificate is signed.
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Hey folks, at the end of the
day a certificate is just
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saying that this person has coverage
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at this particular time.
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It does not replace policy
documents or the inner workings
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of a policy or policy language,
it's just a snapshot in time
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that says, as of right now,
this coverage is available.
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There are a number of things
that can be added to it,
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like additional insurance,
waiver of subrogation,
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but those are discussions
for a different day.
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Hey folks, I hope this has helped,
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I hope this has given you a little clarity
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about what certificate of insurance is,
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and until next time, we'll see you.
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