Ask any small business owner what is the most frustrating part of dealing with insurance. Most will say “certificates of insurance.”
Now, ask any insurance agent or account manager what is the most frustrating part of their day. Most will say “certificates of insurance.”
Coincidence? Not at all.
Confusion and uncertainty on both sides tend to create the issues that surround certificates. In many cases, the business owner thinks they simply need a document (a.k.a. a certificate of liability insurance) that is required in order to bid on a contract, enter into a contract, or get paid for work that has already been completed. Yes, there is specific language that needs to be on the certificate, but it shouldn’t take long to type it and get it sent over, right? After all, the business owner is already paying premiums for their coverage and they just need to show specific proof of it.
Not so fast!
Depending on what is requested on the certificate, the agency may have to endorse the insurance policy. Or, in certain instances, the agency employee can’t legally type the requested information in the certificate because it doesn’t accurately reflect the current insurance program of the business owner.
The major hang-ups that arise from certificate of insurance requests are often two-fold:
- Additional insured status. If an entity requests to be added onto a certificate of liability insurance as an additional insured, this means they are requesting that the business owner’s liability coverage be extended to cover that entity. In some cases, this occurs automatically because the business owner’s insurance policy has an endorsement on it that automatically covers additional insureds (typically those that have a written contract with the insured). In other cases, the insurance policy will have to be endorsed – many times for an additional premium charge – to add the specific entity as an additional insured.Understanding this is critical because depending on how the business owner’s policy is structured, there might not be automatic insurance coverage for the additional insured.
- Requesting specific language in the “description of operations” section. Unfortunately, over the years this section of the certificate form has been abused and entities have requested extensive wording that is not only inaccurate regarding the insurance coverage of the business owner but in some cases illegal.Ohio passed a “Certificates of Insurance Act” that went into effect in 2016. The act “ensures that businesses are protected and insurance coverages stated in the certificate can be found in the policy and, if not, there will be consequences. The legislation makes it expressly clear that agents and businesses who violate the law will be subject to penalties, fines and possible actions taken against their insurance licenses, including losing their licenses altogether.” 
It’s easy to see why there are sometimes delays in getting certificates of liability insurance issued. Savvy agents want to ensure that the information they put on certificates is completely accurate – and legal. They certainly have their clients’ best interest in mind but also have to make sure they are correctly adhering to applicable laws pertaining to this issue.