Anyone who has worked as a subcontractor has at some point been required to provide “proof of insurance” or a “certificate of insurance.” A certificate is nothing more than a snapshot of your current insurance coverage at the time it is issued. It must show your current limits of liability, the insurance company providing coverage, and the period for which coverage exists. In addition to requesting a certificate, many contracts require your client to be added as an additional insured. This would allow your coverage to protect you and your client in the event of a claim. Additional insured status may also limit potential subrogation against your client by your insurance company. It would be unusual to subrogate against one of the parties to the contract. Additional insured status is nothing more than a transfer of risk to another party. Problems arise when you’ve signed a contract that requires certificates to be changed or additional endorsements to be added to your coverage, especially when you make these requests after the job has been completed. It is imperative that you read any contract before signing it and confirm with your insurance provider that you currently meet the insurance requirements stated in the contract or can meet them before work begins.
Contracts generally require you to meet one or more of the following requests; remove text from the certificate, add specific forms, add the general contractor and/or homeowner as an additional insured, and/or add text to the certificate. Your client is trying to limit his liability. Providing the building owner/general contractor with a certificate of insurance does not change the insurance contract and as such the Accord 25 01-08 certificate contains several statements that attempt to make very clear what a certificate does.
“This certificate is issued for informational purposes only and does not confer any rights on the certificate holder. This certificate does not modify, extend, or alter the coverage provided by the following policies.”
“The insurance policies listed below have been issued to the above-named insured for the stated policy period. Notwithstanding any requirement, term or condition of any contract or other document in respect of which this certificate may be issued or may pertain , the insurance provided by the policies described in this document is subject to all the terms, exclusions and conditions of such policies. The aggregate limits shown may have been reduced by claims paid.”
“The Certificate of Insurance on the back of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it modify, expand, or positively or negatively alter the coverage granted by the policies listed therein.
An insurance policy is a contract between the insurance company and you, and unless the policy has been endorsed by the company, any additional or deleted language on a certificate has no bearing on a potential claim. Some contracts require that the mention “this insurance is primary and non-contributory” be added. If your client has been added as an additional insured, a current CGL policy with the correct endorsements added would provide primary coverage without the wording. Some request that the words “endeavour to mail” be removed; most companies will mail notices only to those added as additional insureds. Some states have made it illegal to modify a certificate. It should also be noted that most case law supports the notion that a certificate is provided for information only and is not part of an insurance contract.
You may receive requests to add a specific form to your policy. In an attempt to limit liability, insurance companies have intentionally limited the coverage provided to additional insureds. Either in an attempt to get this coverage back or out of ignorance, your clients request that old and outdated forms be added to their coverage. They generally request to be added as an additional insured through the CG 2010 11-85 form, this form provides coverage of “performed operations”. Old forms may conflict with current liability policies, and in some cases companies may not be allowed by law to use these forms. What used to be done by one form is now done by two, CG 2010 10-01 and CG 2037 10-01.
A simple understanding of what a certificate does will go a long way in helping you meet your contractual obligations. A certificate of insurance does not change your policy. Unless your policy has been approved (modified) by the insurance company, your needs have not been met. In some states it is a violation of the law to modify or amend a certificate of insurance. It is imperative that correct and current forms are used; In most cases, your agent can explain to your client why a form should be used instead of one that has been requested. Read your contract; even though you have provided an acceptable certificate and added your client as an additional insured, you may still be committing to something that is not provided for by your general liability policy.