Do Not Get Caught at the Bottom of the Liability Hill
Today's Risk Managers are using Certificates of Insurance to transfer the liability downstream to the vendors. Even the law expert Peter M.Polstein has said that Certificates of Insurance are "one of the more dangerous documents that float between insureds, insurers, and a myriad of third parties.”
Certificates of Insurance are designed to show proof of coverage. These documents could be the most powerful single page document in the entire insurance world. They combine all of your insurance policies which are inches thick onto a single page. We have previously written about the differences between additional insureds and loss payees.
Recently the courts have challenged these documents West Bend Mutual Ins. Co. v. Athens Construction Co. Inc, 2015 Ill. App. Unpub. LEXIS 255 (Ill. App. [1 Dist.] February 17, 2015). Athens Construction had a " Certificate of Insurance" which stated Athens was an additional insured. But Athens wasn't an additional insured because the policy did not state they were.
The Certificate of Insurance was ruled worthless by the court of appeals because it contains a disclaimer.
"THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW."
This is the standard wording on every certificate, so the most important document in the insurance world may be worthless unless the Insurance Policy states it.
In summary confirm with your vendors the actual policies is endorsed to show the additional insured or loss payee. Contact your GDP Advisor for any questions or to review your current policies.