By Ken Kukral
Having to issue certificates of insurance is a normal activity in most agencies. Especially of you are weighted towards commercial lines. We don’t get paid to do them but it is part of what we have to do to “service” an account. I wanted to convey a few thoughts on certificates:
– They can be a huge source of E&O claims. If you put coverages, or limits or terms on the certificate that do not match the policy, you could run into an issue when a claim comes in and the person requesting the certificate is relying on those limits or coverages.
– Many certificate requests come in last minute and could delay your client from starting a job or occupying their premises. Knowing this, how have you set up your agency to deal with this? Do you have a specific person that handles these? Does that person have a back-up person?
– Procedures. Make sure you have established procedures and you follow them. When a certificate is involved in an E&O claim you are going to need to rely that your procedures works and was followed religiously.
– Know what your state regulations are regarding certificates of insurance. Nothing compounds a situation like a regulatory action on top of a E&O situation.
– Stay informed as to changes going on in the industry. There is a national model act that is being seriously considered and some states have already adopted it’s language. It would make it illegal to use anything but a standardized form such as the ACORD Certificate of Insurance. More to come.
– As I have mentioned in the past, make sure you specify the particular additional insured you want your carrier/broker to use so there is no confusion. 90% of the additional insured requests do not specify a form.
– Get your clients used to asking for them. If they are subcontracting they should be getting them from their subcontractors.
– Know that you must use the latest edition of the ACORD certificate of insurance. The newest form does not have the spot for the number of days for cancellation. The licensing agreement for the prior edition ran out and you run the risk of a legal action by ACORD if you still use it.
– Know your authority. Does your wholesale broker give you authority to issue and sign certificates? Does your carrier? Do you need to send them copies?
I know many of you have set procedures. Make sure you take a look at them every so often to make sure they are up to date. If you don’t have them, put them in to place now!
Stepping back off my soapbox….