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- What is a certificate of insurance and what are the components that make up a complete certificate of insurance? We'll discuss all of that on today's video. Hey folks, Jack Wingate here and on this channel, we help individuals, families, and businesses save money on their insurance, help you understand insurance a little bit better and let you know what's going on in the insurance industry. And if you are in construction, you have heard at least about a certificate of insurance. In fact, more times than not we find with smaller contractors whether it be plumbing contractors, electrical contractors, landscapers, heating and air, carpenters, you name it more times than not the small contractor comes to us because they're bidding on a job or they've just gotten a job and the person they're doing the work for is requiring a certificate of insurance. So, what is it? Simply put, a certificate insurance shows or proves that a certain person has insurance at a certain period of time. It's actually a legal document that shows this proof. So what makes up a valid certificate? There are a number of things that you have to be aware of for a certificate of insurance to be valid. The first part is this, in the top right hand corner, you are going to see a date that should always be a current date. The top right hand corner date shows the date the certificate is being produced. The next component of a valid certificate of insurance, as you move down the page, you're gonna see in the left hand corner up underneath where it shows agency, you're gonna see what should be your, if you're the one requesting the certificate, if it's your insurance, it should be your legal name. Whether it be you're doing business as a person, as an entity, you name it should have your name and address. Then as we scan to the right on that same document, you are gonna see a list of the insurance carriers. Now on a valid certificate, you should have the name of the insurance carrier, and then beside that, the actual NAIC code for that carrier. Every carrier has an NAIC code associated with it. If you do not see that NAIC code, you need ask the question. All right, as we move down, this is where we get into the meat of a certificate of insurance. You are going to see listings in rows and columns for the following. The first row deals with general liability insurance. And there are a number of boxes on here to check, but you have your general liability component. As you move over, you're gonna see some columns. These can be checked for waiver of subrogation, additional insurance, just to check box. Then as you move further to the right, you're gonna come across the policy number. This is where your policy numbers should reside. Again as we move over to the right, you're gonna see the actual effective and expiration dates of that policy. Here is where it is crucial. This is saying, this document is saying that for that policy, you have coverage active coverage for that policy period, starting on the effective date, ending on the expiration date. And then to the far right that's where your coverages are gonna be listed. So if you have a million dollars of a per occurrence general liability, it's gonna be listed there. The next row down, you'll look at auto insurance liability. And this is again, same thing moving forward, policy number, effective dates, policy coverage. The next one down is gonna be for umbrella or excess insurance. Same thing as you move from left to right, you're gonna have the coverages or the checkbox for what types of coverages, the policy number effective and expiration dates, and then your coverage. And then finally, you're gonna end up, not finally, the main next one will be worker's comp listing from left to right. And then there's another column, this will be where we would put in coverage for things like professional liability that's not included up above or installation floaters, what have you, that's where that'll happen. Now, this is the next part down is called the description of operations box. This is where things get a little hairy sometimes when someone is requesting a certificate of you. You let's say you're bidding on a job and the person you're working for or bidding to hands you a diagnosis, we want these things listed on the certificate of insurance. And they'll list out a number of things with wording and a lot of times the wording that they're asking for really should not be put in that description of operations. And you may think, well, what's the difference, I've got coverage, everything should be good. Well, sometimes the legal departments for these other parties are trying to put language into that certificate that doesn't exist in the actual contract. So, a good agent when they see special wording coming in will take a look at it, make sure that your policy has that coverage or that language, or they'll either endorse the policy to make that or tell you right off the bat, we cannot do this or that. It's not that your policy isn't good, it's just sometimes the person requesting a certificate is trying to look out for their best interests and get coverage or find coverage, or find a way to get someone in a lawsuit when they know that coverage may not exist on that policy. So the description of operations is where we see a lot of clients come to us and have questions. Well, why can't you do this? Why can't you just say this? What's the big deal? The big deal is once again, it's a legal contract and if the agent puts something in that description of operations that is not on the policy, then the agent himself or herself can be sued in a lawsuit. Then finally, as we move down and here's what we see a lot from our clients, and we try to help this along with our online certificate request form, the bottom left hand corner is the spot for the certificate holder. In order to have a valid certificate, you must have a certificate holder and we need the full name and the address for the certificate holder. If we don't have that, it's not a valid certificate. We actually have people request all the time, well, just give me a sample certificate. A good agent will never give you a sample certificate of your coverage, the reason being is that certificate can be doctored by someone else. Let the agent produce certificates and send to the people who are requesting for you. The final element of the certificate insurance is on the far right hand bottom corner, and this is the signature. The agent must sign that certificate for it to be valid. So, let's recap the really the main points. Let's make sure in the top right hand corner that we have a valid date. As we move down let's make sure that your name or company is listed properly. Let's make sure that the carrier listed with the NAIC numbers. Let's make sure that we have valid dates and policy numbers for the certificate. As we move down, let's make sure that description of operations says just what's in the policy and nothing more. And then finally is to make sure the certificate holder is listed correctly with everything they need, and then that the certificate is signed. Hey folks, at the end of the day a certificate is just saying that this person has coverage at this particular time. It does not replace policy documents or the inner workings of a policy or policy language, it's just a snapshot in time that says, as of right now, this coverage is available. There are a number of things that can be added to it, like additional insurance, waiver of subrogation, but those are discussions for a different day. Hey folks, I hope this has helped, I hope this has given you a little clarity about what certificate of insurance is, and until next time, we'll see you.