Inside: The most dangerous piece of paper in business, the Certificate of Insurance

A company can prevent the risk through proper drafting of contracts and the requisite level of follow up

It never ceases to amaze coverage lawyers the risk policyholders take by relying on Certificates of Insurance as the sole source of evidence that the other party to a contract has required insurance. Even riskier are those who rely upon those pieces of paper as evidence that someone is an Additional Insured.

Black’s Law Dictionary defines a Certificate of Insurance as a “[d]ocument evidencing fact that an insurance policy has been written and includes a statement of the coverage in the policy in general terms.” But for those wanting to be added as an Additional Insured, the certificate is almost always meaningless without the actual insurance policy being endorsed. And that is where many companies run into trouble.

My broker made me do it

A company may be able to bring negligence, negligent misrepresentation, and/or unfair and deceptive trade practices claims against the issuing broker. Of course, expect a fight based on the assertion that the broker did not owe your business any type of duty. Claims against a broker or agent are difficult to say the least.

Contributing Author

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Collin J. Hite

Collin Hite is the practice leader of the Insurance Recovery Group at Hirschler Fleischer, P.C (Richmond, Va.). He handles insurance recovery and coverage litigation nationally...

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