If You Haven’t Reviewed the Contract, How Could the Certificate be Correct?

More importantly, does the insurance coverage comply with the contract? Through our travels in and about the insurance brokerage world we have seen a wide, I mean very wide, disparity in the protocols for processing certificates. Some firms train new staff by starting them in the certificate department, while others delegate certificates to producers and account executives. Large brokers may have certificate centers or offshore third parties to manage certificate processing. Regardless of how an organization handles certificate needs, Certificate Hero can significantly improve your situation, which brings me back to contracts.

Businesses purchase insurance primarily to demonstrate compliance with third-party requirements. The insurance requirements, like coverage types, limits, additional insured, and waiver of subrogation, are usually contained in the contract or agreement. If you take a close look at most additional insured, waiver of subrogation, and primary and non-contributory endorsements to liability policies, there’s a requirement for a written contract or agreement requiring these statuses. For example, ISO CG 2010 12/19, a common additional insured endorsement for ongoing operations requires the name of additional insured and the location of the covered operations to be specifically listed. The endorsement goes on to further state:

If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

Another commonly used endorsement, ISO CG 2026 12/19, has the same requirements but adds:

If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable limits of insurance; whichever is less. This endorsement shall not increase the applicable limits of insurance.

In response to these requirements many commercial brokers get their insurers to offer so-called “blanket” coverage wherein the insurer adds to the schedule (instead of listing each additional insured and location of covered operations):

Blanket as required by written contract and/or agreement.

Sounds great, but are your processors issuing COIs with AI status without reviewing the corresponding contract? The policy might have an additional insured endorsement but is it the correct one, given the scope of the contract (for example, ongoing v. completed operations)? Again, in response to this many brokers add language to the certificate’s description of operations along the lines of:

XYZ Corp is included as an additional insured as required by written contract executed prior to the loss.


Certificate Holder is included as an Additional Insured with respect to General Liability when required by written agreement per attached form subject to policy terms, conditions, and exclusions.

This is certainly a step in the right direction to limit the agency’s professional liability but it’s no substitute for reviewing and understanding the contractual insurance obligations. What would happen if the processor forgot to attach the corresponding policy language to the COI? Furthermore, as insurers seek to reduce the scope of coverage and brokers look to limit their liabilities for issuing COIs, contract writers have become aware of these limitations and are drafting insurance clauses to sidestep them. For instance, many astute companies use contractual wording to bypass the limitations of 12/19 series ISO endorsements. To address these issues, it's best to review the contract to ensure that your insureds receive the coverage they’ve contractually agreed to provide.

So, it’s only logical to head the issue off where it all starts, with the contract.

Certificate Hero’s AI/ML technology can simplify the review process by scanning contracts for insurance clauses, analyzing the coverages and limits, and comparing these requirements to policy information in the Agency Management System. takes the pain out of reviewing contracts. This process identifies areas of non-compliance and automatically populates certificates where there's compliance, creating value-add progression that helps insureds with compliance while increasing accuracy and profitability of the agency.

While utilizing liability limiting language on certificates can provide some protection, it's not a substitute for reviewing and understanding contractual insurance obligations. One thing for sure, if the insurance doesn’t work as your policyholder thought it would, you likely won’t need to worry about this insured’s contracts as that will be your competitor’s problem (gain). Contact us now for a demo. Turn certificate processing into a profit center while keeping insureds satisfied. It's a Win-Win!


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