This hub contains abreviated information about Certificates of Insurance. Go to this link at Workers Compensation Consultants to find complete detailed information and help with Certificates of Insurance and Insurance Certificates.

Insurance certificates have, in recent years, taken on a life of their own. In the past, the lowly insurance certificate was put to its intended use as a mechanism to notify other parties of the existence of insurance coverage. This document was originally designed only to provide proof of coverage. Today it's used by many with the goal to modify or extend policy conditions and terms of an insurance contract. I've received many requests asking for information about insurance certificates and in this hub will attempt to give you some helpful information that all business owners should know about certificates of insurance!

The Certificate of Insurance form was designed to only provide current policy information to interested third parties. There are two parties involved in an insurance contract, the named insured or the policyholder and the insurance company. When another entity, the third party, needs to verify insurance coverage is in place for the named insured an informational document, known as a certificate of insurance, would be issued and sent.

The typical insurance certificate contains insurance policy information such as type of policy, policy number, effective dates and expiration dates along with information about the insuring company.

The Insurance Certificate then is an insurance mechanism, a document, in place that provides evidence that another will be able to satisfy obligations or promises made. Promises many times transferred within a contract agreement and can include obligations to maintain workers compensation insurance coverage for its workers, obligations to provide protection from liability losses and claims and protection from property damage as assumed under the contract.

Any time your business transactions involve working with another party or entity you should analyze your additional exposure to loss generated from that association and require, as proof of insurance, a certificate of insurance. Your primary goal to to assure adequate protection is afforded to your organization for that additional exposure. When a contract is involved, the insurance certificate will provide support that the contracting entity has secured and maintains the proper limits of insurance as outlined within the contract. And remember, it's not so much about having a certificate of insurance, but about having adequate insurance coverage to protect your assets!

Example: Your business hires a contractor to provide a service for one of your clients. The contractor has a work crew on your project and one of his employees is seriously injured on your work site. After the loss it is discovered the contractor you hired has no workers compensation insurance. The injured worker then looks to you to provide coverage from your workers compensation policy. Guess what? Yep, your work comp policy gets to pay for it!

Example:You hire another company to perform work on your project. After the project is completed your company is sued because of something the subcontractor did not complete properly. You find out the sub you hired has no liability coverage and is unable to provide defense cost to you as outlined within the contract and everybody gets an invitation to a lawsuit party! Your company has now incurred an unforeseen cost due to the sub not having the coverage he was required to carry.

Now for the kicker! Just because you may have in your posession a certificate of insurance does not mean you are protected under the policies listed on the certificate! That's right! Coverage is controlled only by the policies in question, never by the insurance certificate!

So if you can't rely on an insurance certificate then what can you do to protect your company from exposures generated by subcontractors or independent contractors? Here's a few things you should do:

• Never rely on another company's insurance policies to protect your interests. Always keep your own policies in force, there is no substitute for having your own policies when it comes to claim time.
• Always remember the Certificate of Insurance is only valid on the day it is issued. It is only a document used to provide policy information and does not provide coverage under the policies listed on the certificate to the certificate holder.
• If you have determined your company needs special protection and you require special insurance conditions in your contract with subs then you need to make sure the actual insurance policy in question is properly modified by endorsement and that you secure a copy of the actual policy as proof of coverage. Simply relying on the insurance certificate may not be in your best interest.
• Explore other contract requirements such as being added to policies as additional insureds or implementing hold harmless agreements. Be sure to check with your insurance agent and attorney.

These are just a few steps you may want to consider to better protect your company and your company assets from claims caused by others who perform work for you.

Just a few things to look for if your company is asked to provide a certificate of insurance or to sign a contract.

• Does the contract transfer risk to you that may otherwise not be insurable? If so are you willing and able to assume that risk under the contract you are asked to sign?
• Does the contract require special limits of insurance that you may not be able to secure?
• Are you asked to provide named insured or additional insured status to the other entity? If so will this increase the cost or your insurance?
• Are you asked to have the cancellation clause of your insurance policies modified and if so can your insurance company comply with this request?

These are just a few of the items you should be looking for if you have been asked to sign a contract and provide a certificate of insurance for a job or for work you want to perform.

So be careful with dealing with insurance certificates, whether you are the entity asking for one or the entity asking to provide one.  Certificates are not what many folks out there think they are. They are not capable of changing insurance policies, don't be confused and think a certificate is the same as a policy endorsement. Certificates of insurance provide no coverage!

Remember, if you need help or have questions about certificates ask a professional workers compensation consulting firm like Workers Compensation Consultants for help!

Hope this hub has provided some useful information to you. Thanks!