They only worried about a checked box
Posted: Fri May 22, 2015 6:26 am
I just went round and round with a third party certificate management company. I kept getting a response from them that said The General Aggregate Limit must apply on a Per: Project/Location basis. Hm? It exists and I had already sent a copy of the Endorsement so just in case they didn't receive the copy of the Endorsement...I set it again.
I kept sending them a copy of the endorsement and I would get another e-mail stating "The General Aggregate Limit must apply on a Per: Project/Location basis". What the heck! Finally I get a call from the cert management company and what they said was the per project check mark was missing on the COI.
I have a SOP where I send the COI with limits of insurance illustrated and send a pdf showing all endorsements such as WOS, AI, etc. I've had two different attorney's at regional construction companies call me and thank me for such an operating procedure. Their reasoning was that far too many times they've gone to court assuming that the COI was true but then in reality the underlying endorsements didn't exist.
What I wanted to tell the third party cert management was that with a high certainty they have received a COI showing Additional Insured status exists but in reality at the time they received the COI nothing had been manuscripted to the policy. So what happens when the insurance agent forgets to send the AI request to the insurance company or the insurance company forgets to add the AI to the policy?
When COI's are handled in-house, the in-house manager can see my endorsement.pdf file and make an informed decision based upon what they see in front of them. It seems that the third party cert management company doesn't have the ability to make an informed decision. The third party is only worried about seeing a box is checked and move on to the next case.
My State has a form that I send to people that think a COI holds a great legal standing. " these certificates do not in any context amend, extend or alter coverage of the insurance policy. They simply summarize the coverages provided by that policy. "
If the third party cert management company doesn't have the ability to look at the real legal instrument, the real policy endorsement, who is the person that is watching the hen house? You would think that receiving the real deal documents would be welcomed but apparently not. They only worried about a checked box.
I have no problem checking a box but IMHO if a box is missed the endorsements that are included would / should enable a knowledgeable person to make a decision that required insurance is in force.
Maybe I'll add this to my e-mail tag line -
"Black’s Law Dictionary defines a Certificate of Insurance as a “[d]ocument evidencing fact that an insurance policy has been written and includes a statement of the coverage in the policy in general terms.” But for those wanting to be added as an additional insured, the certificate is almost always meaningless without the actual insurance policy being endorsed. And that is where many companies run into trouble.
For some reason, the business community believes Certificates of Insurance are ironclad proof that another entity either has the purported insurance coverage, or worse, has added the company as an additional insured. Many lawyers, and a number of courts, don’t believe these certificates are worth the paper they’re printed on.
As one commentator noted, “the issuance of certificates is one of the more dangerous documents that float between insureds, insurers, and a myriad of third parties.” The reason for the danger is that when there is a conflict or discrepancy between a certificate and the actual policy, the latter controls. Remember, the policy can be changed without any consent from the certificate holder.
Even more dangerous are companies that rely on these documents as proof they’ve been added as an additional insured to another’s insurance policy. The standard ACORD form states that the certificate cannot extend or alter the coverage.
The normal procedure requires the broker to submit a request to the insurer to add an entity as an additional insured, which then endorses the policy. Without the endorsement, your chances of being an additional insured are slim, regardless of what your contract may require or what the certificate may say. In short, the only safe thing is to demand to see the policy and endorsement. "
Oh well --- box is checked and everyone is happy.
I kept sending them a copy of the endorsement and I would get another e-mail stating "The General Aggregate Limit must apply on a Per: Project/Location basis". What the heck! Finally I get a call from the cert management company and what they said was the per project check mark was missing on the COI.
I have a SOP where I send the COI with limits of insurance illustrated and send a pdf showing all endorsements such as WOS, AI, etc. I've had two different attorney's at regional construction companies call me and thank me for such an operating procedure. Their reasoning was that far too many times they've gone to court assuming that the COI was true but then in reality the underlying endorsements didn't exist.
What I wanted to tell the third party cert management was that with a high certainty they have received a COI showing Additional Insured status exists but in reality at the time they received the COI nothing had been manuscripted to the policy. So what happens when the insurance agent forgets to send the AI request to the insurance company or the insurance company forgets to add the AI to the policy?
When COI's are handled in-house, the in-house manager can see my endorsement.pdf file and make an informed decision based upon what they see in front of them. It seems that the third party cert management company doesn't have the ability to make an informed decision. The third party is only worried about seeing a box is checked and move on to the next case.
My State has a form that I send to people that think a COI holds a great legal standing. " these certificates do not in any context amend, extend or alter coverage of the insurance policy. They simply summarize the coverages provided by that policy. "
If the third party cert management company doesn't have the ability to look at the real legal instrument, the real policy endorsement, who is the person that is watching the hen house? You would think that receiving the real deal documents would be welcomed but apparently not. They only worried about a checked box.
I have no problem checking a box but IMHO if a box is missed the endorsements that are included would / should enable a knowledgeable person to make a decision that required insurance is in force.
Maybe I'll add this to my e-mail tag line -
"Black’s Law Dictionary defines a Certificate of Insurance as a “[d]ocument evidencing fact that an insurance policy has been written and includes a statement of the coverage in the policy in general terms.” But for those wanting to be added as an additional insured, the certificate is almost always meaningless without the actual insurance policy being endorsed. And that is where many companies run into trouble.
For some reason, the business community believes Certificates of Insurance are ironclad proof that another entity either has the purported insurance coverage, or worse, has added the company as an additional insured. Many lawyers, and a number of courts, don’t believe these certificates are worth the paper they’re printed on.
As one commentator noted, “the issuance of certificates is one of the more dangerous documents that float between insureds, insurers, and a myriad of third parties.” The reason for the danger is that when there is a conflict or discrepancy between a certificate and the actual policy, the latter controls. Remember, the policy can be changed without any consent from the certificate holder.
Even more dangerous are companies that rely on these documents as proof they’ve been added as an additional insured to another’s insurance policy. The standard ACORD form states that the certificate cannot extend or alter the coverage.
The normal procedure requires the broker to submit a request to the insurer to add an entity as an additional insured, which then endorses the policy. Without the endorsement, your chances of being an additional insured are slim, regardless of what your contract may require or what the certificate may say. In short, the only safe thing is to demand to see the policy and endorsement. "
Oh well --- box is checked and everyone is happy.