Do businesses realize that Certificates of Insurance aren’t a guarantee of coverage without a written contract, no matter what the Certificate states?
In my area of Property & Casualty, I issue a substantial number of certificates. For many businesses, having a Certificate of Insurance feels like a make-or-break situation. It’s concerning to think that numerous businesses may be unaware that all those lengthy clauses and fine print essentially mean nothing unless they also have a proper contract in place—which, unfortunately, many do not!
You raise an incredibly important point about the misconception surrounding Certificates of Insurance (COIs). Many businesses indeed place too much faith in COIs as proof of coverage without understanding the limitations. A COI provides a snapshot of the insurance policy on a specific date, but it doesn’t guarantee coverage for all situations—especially if there’s no underlying contract that specifies the terms of coverage.
It’s essential for businesses to recognize that a COI is not an endorsement of the policy’s applicability; it’s merely evidence of insurance. The actual terms, conditions, and coverage limits are dictated by the insurance policy itself and the contracts that govern the business relationship.
To mitigate risk, businesses should prioritize having clear, detailed contracts in place that explicitly outline the insurance requirements and coverage stipulations. This would not only ensure that everyone is on the same page but also provide a better safeguard against potential gaps in coverage. Education is key in this situation; perhaps there’s an opportunity for insurance professionals to help clients better understand the nuances of COIs and foster a more informed approach to insurance coverage in their contractual dealings.