Too Little Information!

Too Little Information!

June 27, 2019 Business Insurance and Risk Management, The Beacon Blog 0 Comments

When insurance agents or brokers get a client’s request for a certificate of insurance, there is usually a list of insurance requirements often including specific endorsements. What’s sometimes missing is any information about the contract or agreement that triggered the request.

Beyond the requestor’s name and contact information, certificate requests should include:

  • The project owner, if the certificate is for a construction contract.
  • Any additional parties, named or unnamed, for whom insurance is requested. (Some insurers will include all parties required by contract or agreement as additional insureds; others will not. In the latter case, the contractual equivalent of “a player to be named later” is problematic.)
  • The location where operations are to be performed (it could be in a jurisdiction not currently shown or covered on one or more policies).
  • Services to be performed or products to be delivered (required insurance policies may have exclusions or limitations).
  • Any indemnification agreements. (Insurance may not cover the full scope of the agreement. For example, some agreements apply to an indemnitee’s sole negligence which may be excluded by General Liability insurance.)
  • Any confidentiality agreements or environmental compliance requirements (even if insurance is not contractually required, this may be a red flag a client has an uninsured exposure).
  • Contract or purchase price (small contracts or orders should not have unreasonably detailed insurance requirements).
  • Project duration (a one day or one week project doesn’t need 30 days notice of cancellation).

Responsible insurance brokers such as Beacon don’t just “check the boxes” when we receive a certificate request. We need to verify that insurance is in place to meet requirements. If it isn’t, either additional insurance must be requested or the requester must be told it isn’t necessary or obtainable. Our job is easier when we receive an entire contract (we can ignore the parts that don’t apply to our concerns) and don’t need to follow up for additional information.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.