Do businesses really understand that Certificates of Insurance don’t provide guaranteed coverage without a written contract, no matter what’s stated on the certificate? In my area of property and casualty insurance, I issue a lot of COIs. For many businesses, having a Certificate of Insurance feels like a make-or-break situation. I can’t help but think that if more businesses realized that the extensive legal language often included in these documents holds little weight without an actual contract, they’d be stressed out—especially since so many of them don’t have one!
Do businesses just not know that Certificates of Insurance don’t guarantee coverage without a written contract, regardless of what the Certificate says?
Your observations highlight a crucial misunderstanding that many businesses have about Certificates of Insurance (COIs). It’s true that a COI serves primarily as a snapshot of insurance coverage and does not, in itself, provide any guarantees of coverage without an underlying contractual agreement. Many businesses rely heavily on COIs for proof of insurance, but without a written contract specifying the terms of coverage, they can find themselves in a precarious position when a claim arises.
This disconnect often stems from a lack of education about how insurance works and the legal implications of COIs. It would be beneficial for professionals in the industry to take the time to educate their clients about the importance of having a solid contract in place that outlines coverage specifics, additional insured requirements, and indemnification clauses.
Encouraging businesses to seek proper legal and insurance advice can help them avoid potential pitfalls and ensure they have the protection they think they do. It could also be useful to advocate for clearer communication regarding the limitations of COIs during the issuance process. It’s a complex issue, but increasing awareness can lead to better risk management and fewer surprises down the line.