How to Read a Certificate of Insurance and Why it's Important

What is a Certificate of Insurance (COI)?

A certificate of insurance is a document that establishes proof of active insurance and summarizes coverage. It certifies that a policy has been purchased, that it covers the necessary parties, and that the policy has not expired. It also should indicate what conditions are covered under the policy. This form provides important information about the types of coverage you have in place and the amount of coverage you have for each type of event.

When is a COI needed and why is it important?

A certificate of insurance (COI) is important because it protects the other party in a transaction from potential financial losses due to an accident or injury. It shows proper coverage is in place and  lowers risk when hiring a vendor or contractor.

The certificate should be provided by the insured party before any work begins on a job site. That way there's no confusion about whether they have sufficient coverage in case something goes wrong while they're working for you—and you can rest easy knowing that if something does go wrong, your interests will be protected.

If there's ever any question about whether someone has adequate insurance coverage or not, then this document can be used as proof that they do indeed have everything needed in order to operate as expected without fear of being held liable for damages caused by negligence on their part.

The certificate should include information about what types of insurance you have, who is covered under those policies, and the amount of coverage.

How to read Certificate of Insurance Form?

The most requested type of certificate is the ACORD 25, which provides evidence of liability insurance, such as general liability, workers compensation, professional liability, and more. The ACORD 25 can be used by a business to prove it has coverage that meets the minimum requirements set by state law.

An ACORD form is a standard template used by insurance companies to describe their policies, coverage, and terms of agreement with clients. ACORD forms are important because they're standardized—they let you know exactly what you're getting when you purchase or renew your coverage. This makes it easy for all parties involved in the transaction to understand what their responsibilities are, who's responsible for what, and what terms apply for each party during the time period covered by the policy.

While the title may be relatively generic and straightforward, there are many nuances to this standard form that can leave your company open to massive liability gaps if you don’t know what to look for. 

An ACORD form has three parts: the identification section (which shows who sent it), the policy details section (which has information about what's covered), and the signature section (where authorized rep signs).

ACORD forms can be difficult to understand at first glance, but once you know what to look for, its a breeze! ! Here are some tips for reading ACORD forms:

1. Date: When the form was issued.
2. Producer: The insurance agent or broker who issued the certificate. 
3. Insured: This field refers to the policyholder. The name and address of the person(s) or business covered by the policy. 
4. Insurer(s) Affording Coverage: This section lists the names and NAIC numbers of insurance carriers providing the listed coverages to the insured. If there are multiple insurers, their names should stand in separate lines, as Insurer A, Insurer B, etc.
5. Type of Insurance & Insr LTR : All insurance coverages are listed in the type of insurance section, Also in the section, to the right next is the “Insurance letter” box. The Insurance letter indicates which carrier holds what policy, that letter can be found in the “Insurer(s) affording coverage” section. This field already contains a list of some liability policies (such as general liability or automobile) and some blank space to add additional policies for which the policyholder needs proof of possessing. 
6. Policy EFF: The policy effective date is when coverage begins. 
7. Policy EXP: The policy expiration date shows when the coverage ends. 
8. Policy limits: Lists the limits of each specific coverage within the policy. 
9. Description of operations/locations/vehicles: The producers can use this field to add any specific requests to any of the policies such as additional insured(s) and also for any existing waivers of subrogation.
10. Certificate holder: The name of the person or business who requested the certificate. 
11. Cancellation: The is a notice stating that the producer will notify the certificate holder if either party cancels the policy before its expiration date.  
12. Authorized representative: This is where the authorized agent or broker will provide a signature. 

Managing your COIs with PINS

By understanding COIs you'll be able to make sure your business has what it needs to operate efficiently. Having expired or missing COIs can put your business at risk and lead to project delays, additional out of pocket costs and legal repercussions. PINS software helps mitigate that risk by automating the COI tracking process. With PINS you never have to worry if a COI is out of compliance, PINS  will send out renewal notifications when policies are set to expire and notify you when the the new COI has been submitted. Running your business is hard enough, let PINS provide peace of mind. 

See how PINS can automate your COI tracking!