The COI grind: what a certificate of insurance must show

The paper promises nothing

A certificate is proof that a policy existed on the day it was printed, and nothing more.

The current ACORD 25 posted by the New York Department of Financial Services says it is issued as a matter of information only and confers no rights upon the certificate holder. Texas put that idea into law.

Texas Insurance Code Section 1811.051 bars any certificate from altering, amending or extending the policy it points to, and bars it from conveying a contractual right to the holder, as written in the statute text published on Justia. Sections 3D and 5 of the NCOIL Certificates of Insurance Model Act say the same for states that adopt it: a certificate is not a policy, does not change coverage, and confers no new rights beyond what the policy gives. So the policy is the thing. The certificate is a photo of the thing.

What the form shows

Six insurers, eight columns, seven liability lines and three workers comp lines make up the page.

The current ACORD 25 has room for up to 6 insurers, lettered A through F, each with an NAIC number, per the form on the New York Department of Financial Services site. The coverage table on that form runs 8 columns: insurer letter, type of insurance, ADDL INSD, SUBR WVD, policy number, effective date, expiration date and limits.

The general liability block carries 7 limit lines on that same form: each occurrence, damage to rented premises, medical expense, personal and advertising injury, general aggregate, products and completed operations aggregate, and other. The workers compensation block has a per statute checkbox plus 3 employers liability lines, which are each accident, disease each employee and disease policy limit, again per the New York Department of Financial Services copy. If a sub hands you a certificate with blanks in those rows, send it back.

The notice box is empty

The form guarantees zero days of notice if a policy is cancelled.

The cancellation box on the current ACORD 25 says only that notice will be delivered in accordance with the policy provisions, quoted word for word from the form posted by the New York Department of Financial Services. That is 0 days promised by the certificate itself. Section 5 of the NCOIL model act says cancellation notice terms are governed by the policy and may not be altered by a certificate.

So if your contract says 30 days, the only way to get 30 days is an endorsement on the sub's policy that says 30 days, because both the ACORD form and the NCOIL model act put notice terms in the policy. The certificate alone will not save you.

What owners make you show

Two public owners, two different aggregate limits, and no single national number.

King County in Washington and the Colorado Department of Transportation both publish their contract insurance requirements. I pulled the numbers below from each agency's own page. They do not match, which is the point.

Basis: King County figures come from the King County Public Health contract insurance requirements page. Colorado figures come from the Colorado Department of Transportation standard insurance requirements page. The last row comes from the ACORD 25 form text, Texas Insurance Code Section 1811.051 and the NCOIL model act.

Colorado DOT also asks for $50,000 any one fire on the general liability policy, per the same CDOT page. Both owners push the grind one level down. King County requires the contractor to include all subcontractors as insureds under its own policies or to require reasonable and appropriate insurance of them, per the King County page, and CDOT requires substantially similar terms to flow down to every subcontractor, per the CDOT page. As the GC, you collect from your subs what the owner collects from you.

The checkbox is not the endorsement

A checked box means nothing unless a signed endorsement sits behind it.

Go back to those 2 checkbox columns, ADDL INSD and SUBR WVD, out of the 8 on the ACORD 25 form. In Texas, a certificate cannot show additional insured status or a waiver of subrogation unless the policy carries a specific endorsement naming that holder, which works out to 1 endorsement per claimed status, per the Texas Department of Insurance certificates of insurance FAQ citing Section 1811.153. A checked box with no endorsement behind it is a box somebody checked.

Texas puts money on this. Civil penalties for certificate violations run up to $1,000 per infraction, with cease and desist orders and injunctive relief on top, per the Texas Department of Insurance FAQ citing Sections 1811.201 to 1811.204. So ask your sub for the endorsement page, not only the certificate. King County names the exact one it wants, CG 20 10 11/85, per the King County page, and that page goes in the folder next to the certificate.

What tracking costs

Software to track certificates runs from free to a five figure yearly minimum.

The vendor bcs lists 3 plans on its own pricing page: a free plan, a self service plan at $0.95 per vendor per month, and a full service plan at $17.80 per vendor per year with a $10,000 annual minimum. COISoftware lists on its own home page a Starter plan at $49 per month, or $24 per month billed yearly, covering 2,500 base or 500 pro certificates a month. COISoftware also lists a Plus plan at $149 per month, or $74 per month billed yearly, covering 10,000 base or 2,000 pro certificates a month. Those are vendor prices from vendor pages.

What we got wrong

I started this piece thinking the grind was about collecting certificates, and the research says the certificate is close to worthless on its own.

The ACORD 25 form says it confers 0 rights, Texas Insurance Code Section 1811.051 says it cannot convey a contractual right, and the NCOIL model act says it does not alter coverage. A grind that checks only the certificate is checking paper that promises nothing. What protects a GC is the endorsement, like CG 20 10, and the policy behind it, and the certificate attaches neither one.

There is also no one number a sub must carry, since King County wants a $2,000,000 aggregate and CDOT accepts $1,000,000, per their own pages. Tracking certificates is necessary for contract compliance. It is not sufficient for coverage. Asking for the endorsement copy is the step that is easiest to skip and the one that matters most.

If you want the endorsement pages, the expiration dates and each owner's limits pulled into one place before your next job, go to the insurance trade page on VuseDesk and book the $199 consult. We will audit what your subs have sent you and set you up on the General Contractor plan at $99.99 a month. VuseDesk records what you are paid and what you pay out, and it never processes or moves the money.