How to Manage Your Certificates of Insurance

How do you manage your company’s certificates of insurance?

The online educator, Investopedia, defines a certificate of insurance as a “document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals. More specifically, the document lists the effective date of the policy, the type of insurance coverage purchased, and the types and dollar amount of applicable liability.”

As you may know, certificates of insurance are usually requested in a business transaction whereby a vendor, or a tenant conducting business on your property, agrees to accept liability for any losses sustained in the course of the business relationship with you. The certificate of insurance is a summary of that company’s relevant insurance information and proof that the financial protection you may require in case of a loss is there.

These certificates are an important part of doing business, and the more effectively you manage them, the less likely you are to run into problems.

Nevertheless, managing certificates of insurance is a complicated task: You review certificates when they arrive, even enter them into a tracking system and hope you remember to obtain a new certificate from a vendor or tenant when the old one expires. There must be an easier way to manage certificates of insurance.

Here are some tips to help you manage the process:

• Ask for a certificate of insurance from each vendor and tenant with whom you do business. However, you should also do more than just ask for the certificate, particularly on liability policies: Ask to be named as an additional insured and request a copy of the endorsement naming your organization. This can be critical if you must request a defense under that insurance policy. Additional insured status provides you with additional rights under that policy.
• Review the certificate as soon as you receive it. Are the policy dates current? What coverages are provided? What are the policy limits? The coverage limits you require should be spelled out in your contracts. This can be very important, because the standard $1 million in liability coverage doesn’t go far with today’s juries, and you need to ensure the certificate reflects the coverage limits you need.
• Determine which endorsements apply, because some endorsements limit or exclude coverage. Most risk managers recommend that you ask for a complete copy of the policy and its endorsements. Coverage can be broad or greatly restricted, depending on the insurance company providing the coverage or the applicable policy forms. Additionally, you should verify the financial solvency of the carrier providing coverage by checking with A.M. Best Company or another reputable rating organization.
• If you do not have certificate tracking software, set a reminder diary entry a few weeks prior to the renewal date to ensure you receive an updated certificate at renewal.
• One certificate does not fit all. When working with a new vendor or launching a new endeavor, you should consult my office to discuss possible liability exposures you may face.