Author: Bill Wilson
“What is your opinion/rule regarding SAMPLE Certificates to contractors to place in their bid packets for jobs?”
Below are two recent VU newsletter blurbs about this. It’s generally considered not to be a good idea and your carriers may have guidelines on this. I think it was maybe Liberty Mutual who had a document I read outlining what could or couldn’t be done in this area, but I could be wrong about that.
The danger is that the insured may start issuing their own certificates. I’m not sure why someone would need a “sample” certificate during the bid process. If proof of insurance is required at the time of the bid, then I’d just issue a regular certificate. Someone wanting a “sample” they can use repeatedly might be a red flag request and what if there is a change in their insurance program between bids?
I’m aware of at least two instances where members issued “blank” certificates then found out the customer was changing the date and certificate holder information and issuing their own certificates with the signature of an agency staff member on the certificate. IF I did give a sample, I’d be sure to date it, not sign it and, if possible, watermark it with “SAMPLE.”
Another question we get is whether it's proper to issue a certificate in the name of the insured as the certificate holder. I’ve viewed them like "blank" certificates. Why does an insured need a certificate issued to itself unless they plan on handing it out? They aren’t authorized to do that. They already know they have insurance, so, I’d question WHY they want such a document. Talk to your carriers about this. Keep in mind that many agency/company agreements or supporting documents outline what you can or can't do with regard to certificates.
IIABA's Virtual University VUpoint Newsletter
Vol. 17, No. 6 - Issue #392 - Friday, March 18, 2016
"Ask an Expert" Briefs
Blank and TWIMC Certificates of Insurance
"We have had insureds request Certificates of Insurance that show TO WHOM IT MAY CONCERN as the certificate holder. I have been in the business for many years and was taught not to issue these types of certificates. With technology being what it is, a certificate can be issued and emailed to an insured within a matter of minutes and I feel that there is no need for these types of certificates to be issued. The problem I am having is other associates in the office do not feel that issuing the TO WHOM IT MAY CONCERN certificates is a big deal. Do you have any literature that would support the argument of why these type of certificates should not be issued?" – Ohio member
In past COI webinars, we’ve talked about issuing “blank” certificates where the certificate holder field is empty. The same discussion applies to a “To Whom It May Concern” entry as the certificate holder. Ask the insured WHY they want a certificate that says this. In most cases, the reason is that they plan on handing the same COI out to multiple people if they’re foolish enough to accept it. Insureds don’t have the authority to issue their own certificates. The agent, under contract with the carrier, issues a COI on behalf of the insurer. Talk to your companies…I’ll bet none of them would allow this if they knew about it.
IIABA's Virtual University VUpoint Newsletter
Vol. 17, No. 8 - Issue #394 - Friday, April 15, 2016
"Ask an Expert" Brief
Should You Issue “Blank” Certificates of Insurance?
"I had a contractor insured ask for a certificate with no certificate holder name filled in. He wants to be able to give that to people who ask him for proof that he has insurance. I told him that we will issue a cert to anyone at his request, but can’t give him one for him to hand out. This has been our policy forever. Is this the appropriate procedure? He is a new insured and, of course, another agency has done this for him for 20 years."
We have had a flurry of late about questions regarding the propriety of issuing “blank” certificates at the insured’s request. First, I can’t imagine an upstream party accepting a COI directly from the downstream party, especially if the date is old.
Second, check your agency/company agreements and supporting underwriting documentation, or contact the underwriters directly. I have seen agency/company agreements that specifically prohibit this practice. If a lawsuit develops from this practice, my guess is that, if the insurer is stuck with it, the agency is likely to experience an E&O claim from the carrier for failure to follow contractual requirements.
Keep in mind that only an “Authorized Representative” of the insurer can issue a certificate to third parties. You’ll find that signature line in the lower corner of the ACORD form. The insured is not authorized to certify insurance coverages and limits to its business partners, only the carrier and agency. In addition, there may be governing state laws, regulations or DOI directives that control this practice.
Finally, I’ve seen this done before and abused. In a couple of instances, the agency issued a COI with no certificate holder named. The insured not only issued its own certificate to varying parties, it changed the DATE on the certificate to imply that all of the information was still accurate. In at least one of these cases, the agency had signed the original “blank” certificate, implying that the information on the COI was accurate.
In short, when asked for a COI with no certificate holder name, don’t do it.
Last Updated: July 11, 2016
May 5, 2016