Understanding Certificates of Insurance: Not a Guarantee of Protection

Certificates of insurance are commonly used by businesses to verify that their subcontractors have the necessary insurance coverage for a project. However, simply possessing a certificate does not guarantee that all insurance requirements are adequately met. Here's what you need to know:

When to Use Certificates of Insurance

A certificate of insurance might seem straightforward at a glance, but it contains crucial information that requires scrutiny. Knowing what to look for on these certificates is essential. For a detailed breakdown of Certificates of Insurance, you can view our video here.

Proceed with Caution

It's critical to remember that certificates of insurance primarily cover liability insurance. They do not confirm the presence of property or other types of insurance. If a certificate lists equipment, vehicles, or buildings, this could indicate a misunderstanding by the insurance agent about the document's purpose.

Moreover, a certificate of insurance simply shows that the policy existed at the time of issuance and may not reflect current coverage. The risk of forgery also makes it imperative to verify the details directly with the insurance provider. Crucially, the certificate does not detail the policy itself; hence, reviewing the actual policy language is necessary, particularly concerning clauses about additional insured statuses. We offer a video explaining different types of additional insured statuses and their importance here.

Certificates as a Tool, Not a Solution

While a certificate of insurance can confirm the existence of an insurance policy, it should not be the sole method used to ensure your subcontractor's coverage meets your needs. Direct verification of the insurance policy itself is often necessary to avoid gaps in coverage that could affect your project.

Learn More About Proper Insurance Verification

Understanding the specific insurance requirements for your project and how to verify them is crucial for your business's protection. If you need more information on verifying insurance policies or ensuring adequate coverage, please contact Veritas Risk Management at (423) 292-4142. We’re here to assist you with any questions you may have. Additionally, our comprehensive video on this topic is available here.

By taking these steps, you can better safeguard your projects and ensure that certificates of insurance serve their purpose without placing undue risk on your business.