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Certificates of Insurance: The Good, the Bad, and the Ugly!

Author: Michael Gay 

Do you remember the 1966 epic Western starring Clint Eastwood (the “Good"), Lee Van Cleef (the “Bad") and Eli Wallach (the “Ugly)? The plot revolves around three gunslingers competing to find a fortune in buried Confederate gold in the middle of the Civil War. Many credit that film with having catapulted Clint Eastwood into stardom and gained critical acclaim as the definitive “spaghetti" Western.

So, what does this have to do with certificates of insurance(COIs)? Read on and you will see. First, a little context. Several years back, I managed the insurance tracking team for a large captive finance company. The team had responsibility for ensuring that over 60,000 certificates were current and compliant with our lease and loan agreements. While most of the certificates were “good" (compliant), many were downright “bad" or “ugly" (e.g., sloppy, full of errors, unprofessional, and completed in such a way that exposed the issuing agency to potential errors and omissions claims).

Common Errors Found on COIs

Below I discuss some of the more common and egregious errors we had to manage while trying to obtain a “good" (accurate and compliant) certificate.

  • Some agents seemed to not understand what the policies they had sold actually covered. For example, we often received certificates for garagekeepers physical damage to evidence coverage for dealers' inventory (open lot). That is not what garagekeepers coverage does. If you read the policy, standard Insurance Services Office (and most company-specific forms) exclude inventory or stock from garagekeepers forms.
  • While a requirement in a lease is for the certificate to name the lessor as an “additional insured," that is not the case in a loan agreement. Name the lender only as a “certificate holder." Agents routinely named us on loans as an additional insured. There was no contractual or business reason to do this and could expose your client to increased liability.
  • If there is a request to provide evidence of property coverage, for example, then the certificate should only show evidence of property coverage, nothing more. Often agents provided us with certificates detailing all of the insured's coverages. This is a disservice to the insured and is sloppy on the part of the agency. (Perhaps this is how an agency's competitors obtain their insureds' x-dates.)
  • Agents often inserted coverage qualification language and legal verbiage in the “Description of Operations/Locations/ Vehicles" section. This should never be done. COIs are copyrighted and are often filed forms with the state insurance department. An agency should not modify a COI to fit the request of anyone (lender, lessor, or even the insured) no matter how urgent or important the request may seem. Serious consequences can arise for doing this. (For a most recent listing of the laws and regulations surrounding Certificates of Insurance see: Virtual University | Certificates of Insurance Laws and Regulations (
  • One of the most common reasons for bad or ugly COIs was the use of the wrong certificate form, especially the ACORD 25. (The misuse of ACORD 25 was so prevalent I concluded that some seminar somewhere must have told agents that this form was universally acceptable to evidence all coverage types.) The ACORD 25 is a “Certificate of Liability Insurance" and is meant for liability insurance only. Repeatedly agents would list property coverages in one of the blank fields.
  • ACORD 27 or 28 should be used for property only when the certificate holder has an interest in the property. If the request comes from one who has no interest in the property, ACORD 24 is best.
  • For automobile evidence, use ACORD 23 since it allows you to list both liability and physical damage coverages on the same Certificate. While technically one could use ACORD 25 and ACORD 27 or 28, why would they?

Most agency management systems offer an ACORD instruction guide in their reference or help sections. This might be a good time to review it with the agency staff. 

Recommendations on COIs

While agency management systems and on-line certificate services will print out professional looking COIs, this does not guarantee that the agency is producing the correct COI. I recognize that the cost and trouble of issuing certificates are considerable. But producing professional-looking, accurate COIs is one way your agency can demonstrate its professionalism and deliver on its service commitment to insureds.

Bad and ugly COIs could cost your agency in an errors and omissions claim. While it is true that a certificate does not provide, alter, change, or modify coverage and is only a snapshot of the insured's coverage as of the date (and time) issued, that does not mean an erroneous one cannot cause problems.

Your agency could be found liable for misrepresenting coverage that existed on the wrong piece of equipment or vehicle, or that a certain limit of liability was in place when it was not. If the certificate-holder or additional insured named in the certificate relied on this erroneous information to transact business with your insured, your agency may be found liable. I have observed this first-hand.

Bottom line, do not entrust untrained or inexperienced people to handle one of the most important tasks in the agency. Look at the certificate request as an opportunity to provide exceptional, professional service, and commit to getting rid of those “bad" and “ugly" COIs. When your agency prepares a certificate, make it a “good" one.

Date Published: July 28, 2023


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