How Do Certificates of Insurance Work?

[dude mud]

I have a question about Certificates of Insurance.

I understand that if your a vendor and you are doing a job at a building, they need proof that you are covered. Which is where the certificate comes in. What does the insurance broker need to do to get the certificate? I have been told the certificates have an expiration date, what is the process of renewing them?

I am interested in becoming an insurance broker and from I have learned, the certificates are part of the business.

 

[STIBROKER]

are we talking about health insurance here.....

 

[GoCubsGo]

Sounds like business liability

 

[djs]

We are talking about commercial insurance, whether its liability, auto, workers comp, etc.

Certificates vary by carrier and the arrangements agents have with the carriers. They can be a significant piece of service work and larger commercial agencies will have people dedicated to simply doing certificates. I know part of my marketing presentation is that I will always get certificates out within 4 business hours of a request, usually much, much faster.

Sometimes carriers want to do the certificates, or if you went through a wholesaler, they will do the certificate. This will slow the process down tremendously. I always try to get where I can do them and then forward a copy to the carrier (if needed).

Certificates are setup 'per job or event'. So if I have someone doing work at a construction site, I will date the certificate for the days needed to do the work. Okay, I usually pad this a bit, but part of the certificate is usually a statement that you will notify the certicate holder if there is a change in the underlying policy and give notice for cancellations. To many certificates laying around can cause a LOT of extra work sometimes.

You'll also run into similar situations for home and auto where you have to prove the lienholder that insurance exists on the risk. These are usually simpler, since you enter the data and the carrier worries about notifications. It's also not frequently changed (though refi's, mortgage mods, car purchases, etc can add up quickly).

Dan

 

[Guest]

The insurance broker provides the certificate as a service after the sale of the insurance policy. The certificate is a one page document showing that a business owner or individual has insurance and notification in the event of cancellation.
When requested to provide a certificate the insurance broker finds out if the certificate of insurance is for proof of property, liability, owned or leased auto, garage liability, auto physical damage, etc. Also, the broker finds out the name of who is requesting the certificate, the address of where the certificate is to be sent and the required limit of liability insurance if the certificate is for proof of liaiblity insurance.
Then, the broker fills in the information on the certificate:
The named insured, named insured's address, the name of the carrier(s), type of coverage(s), policy number(s), policy period(s), limits of insurance, deductible, the number of days to send notice of cancellation, where the insurance applies, description of operations, name and address of who is requesting the certificate.
The broker keeps a copy and sends a copy to the carrier and if applicable, the broker has a system to re-issue the certificate when the insurance policy shown on the certificate expires.
Also, there may be issues beyond just filling out a certificate. If the certificate is for proof of liability insurance the broker needs to know how to handle a situation if the customer's limit of liability insurance is less than the limit being required by the certificate holder. If the broker finds out that proof of insurance is for a lease of premise or a building the broker will review the insurance requirements in the lease before filling out the certificate.
Good luck on deciding whether or not to be a insurance broker!

 

[dude mud]

Good luck on deciding whether or not to be a insurance broker!

Thank you for the answers.

So these last for a year? How are they renewed? Can they be renewed the start of the new year or do they have to be renewed on the day of expiration?

I like knowing these little details. They seem fun.

 

[djs]

If they need to be renewed (some do, some don't), they are renewed on the policy renewal.

Certificates can expire anytime you would like, except they should not go beyond the end of the policy. This means certs for things like leases, equipment, buildings, loans, etc, get renewed on the policy renewal. Certs for construction / service / installation type jobs, probably don't require renewal, but if they do, they also get renewed either at the expiration of the certificate, or at policy renewal.

Some clients can have hundreds of certificates, especially if you get into construction. The average is probably around a dozen or so per client, some only have 1 or 2. It depends a lot on the type of business you insure. Commercial service work can take many since each job will likely require a certificate (or several), might last a week, and then off to the next. Others, like a clothing store, usually require 2 or 3 total, for the landlord, a loan company, and sometimes a vehicle, and they don't change throughout the year.

Dan

P.S. Don't get hung up on certs. They are simple enough, but if you have several commercial clients who require certs to do their work, it will become a service issue. You can use tools, such as formsboss, to simplify the generation of these certificates. Most true agency management systems have certificate holder databases as well.

 

[dude mud]

If they need to be renewed (some do, some don't), they are renewed on the policy renewal.

Certificates can expire anytime you would like, except they should not go beyond the end of the policy. This means certs for things like leases, equipment, buildings, loans, etc, get renewed on the policy renewal. Certs for construction / service / installation type jobs, probably don't require renewal, but if they do, they also get renewed either at the expiration of the certificate, or at policy renewal.

Some clients can have hundreds of certificates, especially if you get into construction. The average is probably around a dozen or so per client, some only have 1 or 2. It depends a lot on the type of business you insure. Commercial service work can take many since each job will likely require a certificate (or several), might last a week, and then off to the next. Others, like a clothing store, usually require 2 or 3 total, for the landlord, a loan company, and sometimes a vehicle, and they don't change throughout the year.

Dan

P.S. Don't get hung up on certs. They are simple enough, but if you have several commercial clients who require certs to do their work, it will become a service issue. You can use tools, such as formsboss, to simplify the generation of these certificates. Most true agency management systems have certificate holder databases as well.

So this is all computerized? Do you issue the certificates on the expiration date itself or does it happen automatically as soon as the new year begins? How much discretion does an insurance broker have in doing these certificates? Can they renew them anytime before the expiration date?

The only problem I see with certificates is that you have to be really organized to make sure they are sent out on time. Ideally you can get them done as early as possible getting them out of the way.

Is there a way to change the expiration dates? Who sets those dates?

 

[Marisa25]

If you are a vendor please make sure that the amount and dates are in compliance. As risk managers, it is a bit time consuming catching up on all of them as the expiration dates vary from each subcontractor.

I like using a certificate of insurance management software like: JDi Ctrax