A certificate of insurance provides evidence of insurance policies in force for the named insured on the certificate. The most common form of a certificate of insurance is published by the Association for Cooperative Operations Research and Development (ACORD) and is regularly updated to ensure compliance with all 50 states' insurance regulations. Certificates are commonly requested by parties with business relationships to ensure proper insurance is in place.
Common Certificate Types
The most common certificates of insurance are the ACORD 25 Certificate of Liability Insurance and ACORD 24 Certificate of Property Insurance. The ACORD 25 includes spaces to evidence multiple policies, such as commercial general liability (CGL), automobile liability, workers' compensation and excess liability. ACORD 24 forms include spaces for various first-party property insurance policies, such as commercial property, inland marine, crime and boiler and machinery. Both certificates are issued by an agent or broker and provide extensive policy detail.
Most certificates of insurance are used within the insurance industry on a nationwide basis to eliminate confusion and duplication. Many business dealings cross multiple states, and it is cumbersome to issue multiple certificates merely due to individual state regulations. ACORD monitors regulatory changes nationwide and modifies its forms regularly to ensure constant compliance with all 50 states' regulations. Forms carry an edition date on the lower left corner so users can be assured they have the most current version.
State-specific Certificates of Insurance
Certificates specific to one state are frequently used to evidence those insurance coverages that are closely regulated by the state. The most commonly used form is evidence of liability insurance used for automobile liability insurance. This is not to be confused with the auto ID cards, which also are generally state-specific but are different from an insurance certificate. Insurance companies and agents are responsible for issuing the forms but must use the correct form, depending on the vehicle's garaging state.
Problems with Certificates of Insurance
Certificates are commonly provided to interested parties to evidence insurance coverage in force. While they provide a great deal of information regarding effective dates and limits of coverage, the certificates themselves do not provide extensive detail as to the content of the policies. Even standard form policies have endorsements that modify the coverage. This information is not contained on the certificate of insurance and provides a risk to the party receiving the certificate that while a policy is in force, it may not necessarily provide the exact coverage expected.