The first certificate of insurance (COI) article I can recall writing was in 2001, two decades ago. It followed a seminar I attended led by the late, great Don Malecki. That seminar and a series of articles led to a white paper originally published in 2006:

Certificates of Insurance Resources

Since that time, I’ve done dozens of seminars and webinars on COIs, the first being a webinar attended, based on our best estimate, by over 7,000 people. Over the next 10 years, I spoke extensively on the subject and things seemed to improve substantially through this effort and that of Big “I” state associations who worked to enact legislation and regulations dealing with the most critical issues.

However, in the past year or two, I suspect with a new generation of players, things seem to be reverting to the pre-2010 days. For example, just recently an agent shared with me a series of documentation requirements from an upstream party for whom her insured was working. Among these requests was:

A letter from the Subcontractor’s insurance broker(s) to [project manager] that the policies and coverage shown on the insurance certificate are fully in force and should the status of those policies and/or coverage change at any time for any reason whatsoever, the Subcontractor’s insurance broker(s) shall notify [project manager] within one (1) calendar day of such change(s).

This letter shall further state that should the Subcontractor’s insurance broker(s) fail to comply with the aforementioned notification provision, the Subcontractor’s insurance broker(s) shall agree to indemnify, defend, and save harmless [project manager] from and against any and all claims arising out of such policy and/or coverage(s) changes, and further from and against any and all loss, cost expense, liability, or damaged, including legal fees and disbursements, resulting from those policy and/or coverage change(s).

I would never recommend that any agency submit a document with such a broad indemnification statement. Nor would I advise any agency to provide any notice of a change in coverage. In fact, due to the lobbying efforts of the Big “I” association in the state where this construction project was taking place, there was a DOI regulation that says:

“[I]t is improper to state on a certificate of insurance that a party will be notified if the underlying policy is cancelled if that party is not entitled to notice under the terms of the policy.”

Many states have similar and even broader laws and regulations that prohibit agents from doing certain things or providing COIs or related documents like this. Some of these states make it illegal to even be asked to do so.

At the end of the day, how you handle such requests is a business decision, but make sure your E&O policy limits are high, recognizing that such impositions on the agency essentially comprise a noose in which you are expected to stick your head through.

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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