By Britton D. Weimer, JD
Certificates of insurance are important. For some of your customers, what you put on a certificate of insurance will seem (in the short run) more important than the coverage you write in their policies! For example, subcontractors often cannot even work for a general contractor until they provide a certificate of insurance that confirms they have particular CGL, workers compensation and other coverages required by the contractor.
Obviously, both the insured and the third party rely upon the accuracy of the certificate of insurance. Thus, it is surprising how often agents forget to verify the information in the certificate by checking it against the actual policies. For the busy agent, it can be very tempting just to print out the information from the last certificate of insurance, simply changing the name of the certificate holder. But obviously that is not good enough. Coverages change over time. And simply copying the old certificate can lead to the perpetuation of errors for months or even years.
The discipline of checking every certificate of insurance is also a helpful sales tool, keeping you on top of your customer’s coverages and reminding you if a renewal is pending, if a policy has lapsed, if coverage questions remain unresolved, or if new coverages can be suggested.
Your customers may seem cavalier about the contents of their certificates, and may seem more concerned with speed than accuracy. But if they experience an uninsured loss and the certificate represented that coverage was in place, then you may be facing a difficult-to-defend E&O claim for misrepresentation. In short:
“Do not issue certificates of insurance based upon old information, without confirming present coverages.”
Britton Weimer is an insurance-defense attorney in Minneapolis, and has defended insurance agents and brokers in E&O litigation for over 20 years. He is the co-author of the new Thomson-West treatise, The Law of Commercial Insurance Agents and Brokers.
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