Certificates of dubious value

Don't rely on certificates of insurance

Millions of certificates of insurance are issued each year, and perhaps no industry routinely requires and uses insurance certificates more than the construction industry. Construction contracts typically require contractors at every level to furnish certificates of insurance to upstream parties with whom they have contracted; building owners require certificates of insurance from their general contractors, and general contractors require certificates of insurance from their subcontractors. Subcontractors should similarly require certificates of insurance from sub-subcontractors and suppliers.

Given the risks and potential for injuries, losses and damages inherent in construction, having the appropriate insurance should be a prerequisite for every construction project. A certificate of insurance identifies the insurance policies held by the party on whose behalf the certificate is being issued. Insurance brokers and agents issue insurance certificates to owners and upstream contractors to show their clients maintain the insurance required in their construction contracts. The certificate provides basic and important information: types of policies, policy numbers, policy limits and the time periods the policies are in effect.

If additional insured status is requested, as is invariably the case, the certificate also may indicate the certificate holder and others are additional insureds on the policies of the named primary insured party. When entering into a contract with a building owner, it is common for a prime contractor to provide a certificate of insurance to the owner with a notation on the certificate that the owner and, perhaps, the architect are additional insureds. Subcontractors routinely are contractually required to provide certificates of insurance indicating general contractors, owners and architects are additional insureds.

ACORD certificate forms