The insurance industry has several ways of providing evidence of insurance. With automobile insurance for example, the Department of Motor Vehicles accepts automobile ID cards as proof of insurance when registering a vehicle. Mortgage companies and banks often only accept insurance binders. Businesses and contractors are usually issued certificates of insurance as proof of coverage.
Certificate of Insurance Information
A certificate of insurance identifies the name and address of the policyholder (insured). In addition, it lists the insurance company name, policy number, policy limits, policy term and a brief indication of some of the coverages included under the insurance policy. Certificates of insurance are issued by either an insurance company or an insurance broker as a document to prove insurance is in effect.
The certificate holder as indicated in the left-hand box at the bottom of the certificate is issued the document after making a request to either the policyholder or the insurance broker. Being a certificate holder means that you are given proof that insurance is in effect. Additionally, as a certificate holder, if the policy is canceled, the insurance company will attempt to notify you of the policy’s cancellation.
Additional Insured and Ancillary Coverages
A certificate of insurance can only mirror the coverages and terms as outlined in the insurance policy. Therefore, if you, as a certificate holder, want a certificate to list you as an additional insured on a liability policy or a loss payee on a property policy, the insurance policy must be endorsed first. Once the policy is endorsed adding you or your firm as an additional insured and/or loss payee, then the certificate of insurance can be modified to list you accordingly. The policy is modified first, the certificate of insurance second.
When the insurance policy expires at the end of the policy term, you should receive a renewal certificate for the new insurance term. Although the insurance broker or insurance company should automatically mail out renewal certificates of insurance, it’s best to set up a follow up diary system to ensure that you receive the renewal certificate in a timely fashion.