Insurance Law Lesson 78: Certificates of Insurance

Prior lessons have covered “additional insured” (Lesson 5) and “downstreaming” (Lesson 71). In short, when a principal entity faces liability for the acts of an entity that is working on the principal’s behalf, the principal frequently requires the subcontractor to take on the principal’s risk. This takes two forms – direct contractual indemnification by the subcontractor and the subcontractor purchasing insurance to cover the principal.

For the insurance side, the principal will seek proof that the subcontractor procured the required coverage, frequently by requesting a “certificate of insurance” (“COI”). But, a COI is usually created by the policyholder’s agent and is not binding on the insurance company. So, if the COI has incorrect information, the principal could be up a creek. Moreover, the standard COI form says all over it that only the actual policy creates coverage.

Leave a Reply