Here’s Why Your Certificates of Insurance are Worthless

Heres Why Your Certificates of Insurance are WorthlessWorthless might be too strong of a word, but the point is that a certificate of insurance (COI) doesn’t hold as much meaning as you might think. Here’s why: a certificate is not an insurance policy and therefore cannot amend, extend or alter the coverage on your policy.

A COI is strictly an informational document and isn’t considered a contract. The information provided by a certificate includes a description of the coverage types and liability limits, as well as the policy’s effective date. It should also include any special insurance requirements that have been specified in the commercial agreement, such as naming the certificate holder as an additional insured.

The purpose of a certificate of insurance is to confirm that the coverage that was specified or required is carried and enforced at the time of issuance. Therefore, a certificate of insurance can’t guarantee that the insurance policy won’t be canceled after it’s been issued or before the completion of any contractual arrangements.

Additionally, COIs can’t guarantee that the coverage limits won’t be exhausted by other types of claims, that the required endorsements have been added to the policy, or that the policy doesn’t contain endorsements or language that might reduce coverage.

According to Trusted Choice, 1 in 25 errors and omissions (E&O) claims involve a COI and 21 percent of these claims involve instances where the certificate holder misrepresented coverage. Here are four ways your business can manage certificates of insurance:

  1. Establish an organized system to monitor compliance with insurance requirements and serve as a permanent record.
  2. Verify that certificates are received, properly filled out, and signed.
  3. If your requirements are not met, request that additional coverage is purchased and that you be presented with a new certificate.
  4. Review all certificates periodically to ensure that the policies are still in effect.

Trust your independent agent to issue and review all certificates of insurance; they can ensure that the information detailed is accurate and that the policies are enforced and any requirements are met.

For more information on certificates of insurance, contact the experts at McGrath Insurance Group at 508-347-6850 or visit

*This article is written for informational purposes only and should not be construed as providing legal advice.