Delaware Business Insurance Update From CNC Insurance Associates Inc. "Certificates of Insurance Are Not Policies" 5-7-17
Every business owner at one time or another find themselves having to request a certificate of insurance from their agent. This could be to show coverage for adding a new vehicle, equipment, property, or complying with contract terms, etc...
However what most do not know is that a certificate of insurance is not part of the policy. The certificate is just a summary document of what coverage could apply in the actual policies. The certificate itself has bold language on the top of the form stating that the document is issued " as a matter of information only" and "does not amend, extend, or alter" the coverage in the policies.
So why are certificates requested and issued so frequently when they are not part of the actual insurance policies? The main reason is that most people do not understand nor have the time to review insurance policies to determine if there risks and interests are covered. The certificate of insurance was the creation of the industry. It was to prevent the passing around of insurance policies to avoid people having to read and decipher them for the numerous transactions that require insurance coverage. Certificates can cause problems for business owners. Many are issued with the recipient thinking that their interest are covered as they expect .After a claim however, the actual policy may have terms, conditions, or exclusions that affect the outcome of the claim and how it is paid.
For now the certificate of insurance is the document the industry allows to be used to show insurance coverage. Be aware that it is not a part of the policy and does not actually prove coverage. As always read your policies and talk with your insurance professional to understand the coverage you have and do not have, for your business. Until next time be careful out there and know your risks.
G. Kevin Nemith President CNC Insurance Associates & The Business Insurance Center
Serving, DE, MD, NJ, PA, & VA
www.cncinsurance.com
www.bizinsurancetv.org
However what most do not know is that a certificate of insurance is not part of the policy. The certificate is just a summary document of what coverage could apply in the actual policies. The certificate itself has bold language on the top of the form stating that the document is issued " as a matter of information only" and "does not amend, extend, or alter" the coverage in the policies.
So why are certificates requested and issued so frequently when they are not part of the actual insurance policies? The main reason is that most people do not understand nor have the time to review insurance policies to determine if there risks and interests are covered. The certificate of insurance was the creation of the industry. It was to prevent the passing around of insurance policies to avoid people having to read and decipher them for the numerous transactions that require insurance coverage. Certificates can cause problems for business owners. Many are issued with the recipient thinking that their interest are covered as they expect .After a claim however, the actual policy may have terms, conditions, or exclusions that affect the outcome of the claim and how it is paid.
For now the certificate of insurance is the document the industry allows to be used to show insurance coverage. Be aware that it is not a part of the policy and does not actually prove coverage. As always read your policies and talk with your insurance professional to understand the coverage you have and do not have, for your business. Until next time be careful out there and know your risks.
G. Kevin Nemith President CNC Insurance Associates & The Business Insurance Center
Serving, DE, MD, NJ, PA, & VA
www.cncinsurance.com
www.bizinsurancetv.org
