Do businesses realize that Certificates of Insurance don’t guarantee coverage without a written contract, no matter what the certificate states?
In my experience in the Property & Casualty sector, I issue a significant number of certificates. For many businesses, the COI is everything. It’s concerning to think that so many companies might be unaware that all those lengthy clauses they rely on are essentially meaningless without a corresponding contract, which unfortunately many don’t have!
You raise an important point! Many businesses often assume that a Certificate of Insurance (COI) provides the same level of assurance as a formal contract, but that’s not the case. A COI serves primarily as proof of coverage and can outline specific details such as policy limits and types of coverage, but it doesn’t enforce or guarantee the terms of coverage without an underlying contract.
This misunderstanding can lead to significant gaps in protection and liability exposure. It’s crucial for businesses to recognize that they need formal agreements in place to ensure their coverage aligns with their specific needs and risks. Education around this issue is essential—perhaps more efforts should be made by insurance professionals to communicate these nuances to clients. Clients should be encouraged to seek a clear understanding of both the COI and the contractual obligations that dictate coverage.