“Certifiably” Insured

By: Wayne Salen

In the three decades of my risk management career, there is no topic more discussed yet less understood than the Certificate of Insurance. The commercial insurance industry is as confusing an industry as there is, and if you are not a competent insurance professional, most of the technical detail is simply too cumbersome and difficult to understand. Some companies, including temporary staffing firms, use this confusion to their advantage.

What does one need to know about Certificates of Insurance (COI)? Here are some basics as well as some lesser-known important issues you need to know:

•A Certificate of Insurance (COI) is not a part of an insurance policy, and does not amend, delete or qualify coverage. It is, in its purest form, a document that shows current coverage of the named insured.

•A COI cannot be relied upon as evidence of agreed coverage should a dispute occur and a court case ensues. This aspect has been decided many times in many courts throughout the U.S. It also does not replace nor subordinate the insurance policy.

•A COI provides valuable information and should serve as information that cements the business relationship. It provides the names of the insurance carriers providing coverage, the policy dates of coverage, the policy numbers assigned by the carrier and the limits of coverage from those policies. It also provides specific aspects of those policies, such as type of coverage, occurrence form or claims made. In addition, it includes the specifics of coverage, such as autos covered, and even the deductible or retention of the particular policy noted.

•A COI does not provide the specific terms and conditions of coverage in the policy. This is important to customers and prospects. You need to know that COI's are generated by insurance brokers and/or agents, most likely not by the temporary staffing company. As such, whoever is generating the COI is a partner to the relationship as it concerns the content of the COI. So what does this mean to you, the customer or prospect? My first suggestion to a business partner is to call the producer (broker/agent). If you have a COI that does not provide the telephone and fax number of the producer you should be concerned. One of the oldest and most pervasive frauds is using a COI as evidence of coverage when there is none. So call the producer and ask, "Do you insure Labor Finders? How long have you insured them?" Transparency and trust is what we at Labor Finders provide our business partners. It is paramount!

•Lastly, when additional coverage or extensions of coverage are requested, don't be miss-lead as to what that means. A typical COI that provides something additional, let's use the additional insured status as an example, does not change the terms and conditions of coverage within the policy. In this case, it only adds the customer to the coverage afforded, but does not provide any additional coverage not included in the policy. An example of this is "sole negligence". If the customer is solely negligent for an occurrence (loss), the additional insured status does not provide coverage since sole negligence of another party (any party not a named insured) is not provided in the policy.

While there are many more examples of false assumptions that have developed over the years with COI's, the most important issue that you need to know is that each and every one of the COI's that our customers or prospects receive, can be verified directly with the producer and that transparency is for you. We do want to be your preferred vendor and we know that by gaining your trust we will achieve that status.

Wayne Salen
Director of Risk Management, Labor Finders International
RIMS Board of Directors; Director Audit, Standards and Practices