A Certificate of Insurance is formalized documentation showing or proving your insurance. These are usually provided for Liability, but mortgage companies and lien holders will often want the COPI (Certificate of Property Insurance) as well.
Certificates of Insurance do not in themselves convey any rights or privilege’s to insurance policies; they only show specific details about policies. Although, special endorsements in favor of 3rd parties are sometimes noted on COIs, if they have already been added to a policy. Usually, the COI allows for the notification of the Certificate Holder by the Carrier or Broker of cancellation of the policy as stated in the policy contract.
For Example: If a property owner hires a contractor to perform any work on his property. It would be in the property owners’ best interest to get a copy of the contractor’s current COI, confirming all required insurances are in place with the property owner’s information listed in the Certificate Holder section. If that contractor hires a sub-contractor, the sub-contractor should also provide a COI to the contractor – or the contractor can be liable for damage/losses by the at-fault sub. The property owner may request to be added as an additional Insured with a Waiver of Subrogation and a Primary & Non-contributory Clause. This helps insulate the property owner from damages caused by the contractor on the property owners’ property.
Common endorsement listed on COIs are:
- Additional Insured – this gives another party “insured” status for any claims/losses pertaining solely to the work performed by the Named Insured (the person and company obtaining the policy in their name for their business operations). This is NOT a substitute for having your own company covered by your own policy.
- Waiver of Subrogation – This waives the insurance carrier from seeking restitution from a covered claim from a 3rd party.
- Primary & Non-Contributory Clause – this is a clause stating that the insurance referenced is the primary insurance responsible for claims/losses for the Named Insured.