HOW TO READ CERTIFICATES OF INSURANCE

WHY SHOULD I REQUEST A CERTIFICATE?

A Certificate of Insurance (COI) provides evidence that an outside group/organization/company
conducting activities or business on public property purchased specified types – and sufficient amounts –
of insurance should an accident occur. This reduces the risk that public entities will be brought into a
lawsuit, because the outside party does not have proper insurance.

WHEN SHOULD I REQUEST A CERTIFICATE?

You should request a COI from:

• ALL Independent Contractors – PDRMA has developed several samples of written insurance
requirements to use in different circumstances. These requirements specify the types and amount
of insurance for the identified circumstance and include samples of the Additional Insured Police
Endorsements you should receive from the outside party responsible for providing insurance.
− Construction contracts.
− Professional service contracts (legal, accounting, architectural services).
− Transportation services (bus, van, etc.).
− Use of public property (parks, facilities, vehicles).
− Lease agreements.
− Serving liquor.
− Program instructors.
− Vendors.

• Outside Groups, Organizations or Entities Wanting to Use Public Property

− See “Insurance Certificates – When to Request One” chart.

WHY A COI AND NOT INSURANCE POLICIES?

COIs are a common practice in the insurance industry for good reason. Obtaining required copies of
insurance policies from an outside party is cumbersome if not impossible. However, if you request a COI,
you must understand what it does and does not do.

WHAT A CERTIFICATE DOES

The COI provides only general information about the types and amount of insurance purchased by a
party.
• Name of insurance company(ies) providing the coverage.
• Limits/amount of insurance purchased.
• Type of coverage purchased.
• Policy effective and expiration dates.
WHAT A CERTIFICATE DOES NOT DO
The COI is not an insurance policy and provides only general information, so it does not tell you:
A.M. Best’s rating of the financial condition of the insurance company(ies).
• Whether the aggregate limit (total amount of insurance available) is lower because claims have
already been made against the policy during the policy year.
• Whether the party purchasing the coverage has a large deductible or is self-insuring a certain dollar
amount of loss.
• If the insurance policy has been endorsed to add the entity as an additional insured.
• If the policy has been canceled.

WHAT CAN I DO?

Knowing how to read a COI – and using it to determine if the party meets specified insurance
requirements – can do much to protect public entities. Obtaining a copy of the appropriate Additional
Insured Policy Endorsement is very important and goes a long way to help ensure a public entity is
properly protected against claims or loss arising from another party’s activities or operations.

To help you evaluate the information provided in a COI, the following chart breaks down
the certificate into numbered sections and provides an explanation of each. The
comments correspond to the numbers shown on the following Sample Certificate of
 Date (MM/DD/YY)
ACORD CERTIFICATE OF LIABILITY INSURANCE
PRODUCER 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
1 3 THE COVERAGE AFFORDED BY THE POLICES BELOW.

4 INSURERS AFFORDING COVERAGE NAIC #

Insurer A
INSURED Insurer B
2 Insurer C
Insurer D
COVERAGES

5 THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE
MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS
AND CONDITIONS OF SUCH POLICIES AGGREGATE. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
Insr Add’l POLICY POLICY
EFFECTIVE EXPIRATION
Ltr Insurd TYPE OF INSURANCE POLICY NUMBER DATE DATE LIMITS

6 GENERAL LIABILITY f. Each Occurrence $

a.  COMMERCIAL GENERAL LIABILITY d. e. e g. Damage to Rented
b.  CLAIMS MADE  OCCUR Premises (Ea occurrence) $
 __________________________ h. Med Exp (any one person) $
 __________________________ i. Personal & Adv Injury $
c. Gen’l Aggregate Limit Applies Per j. General Aggregate $
 Policy  Project  Loc k. Products – Comp/Op Aggregate $
7 AUTOMOBILE LIABILITY f. COMBINED SINGLE LIMIT
a.  ANY AUTO (Each accident) $
b.  ALL OWNED AUTOS
g. BODILY INJURY
c.  SCHEDULED AUTOS
(Per person) $
d.  HIRED AUTOS
e.  NON-OWNED AUTOS h. BODILY INJURY
(Per accident) $
 __________________________
i. PROPERTY DAMAGE
(Per accident) $
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $
8  ANY AUTO OTHER THAN AUTO ONLY:
 ___________ EACH ACCIDENT $
AGGREGATE $
EXCESS/UMBRELLA LIABILITY d. EACH OCCURRENCE $
9 a.  Occurrence  Claims Made e. AGGREGATE $
b.  Deductible $ ____________
c.  Retention $ ____________ $
Workers Compensation and  b. WC STATUTORY LIMITS  OTHER
Employers’ Liability c. E.L. EACH ACCIDENT $
10 a. ANY PROPRIETOR/PARTNER/EXECUTIVE
d. E.L. DISEASE – Each Employee $
OFFICER/MEMBER EXCLUDED?
If yes, describe under SPECIAL PROVISIONS below e. E.L. DISEASE – Policy Limit $
OTHER
11
$
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISIONS
12

CERTIFICATE HOLDER CANCELLATION

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL DAYS

13 WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT. BUT FAILURE TO DO
SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS
AGENTS OR REPRESENTATIVES.
14
AUTHORIZED REPRESENTATIVE
15
ACORD 25-(2001/08) © ACORD CORPORATION1988
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

Producer The insurance agent/broker Most likely, this entity prepared the
1 through whom the insurance Certificate of Insurance.
was purchased.
Insured The entity that purchased and is The name appearing here should be the
2 covered by the insurance person/organization requested to
(named insured). provide insurance coverage.
This Certificate is issued The Certificate merely shows Being listed as “additional insured” on
as a matter of information the coverages purchased and the Certificate has limitations, and your
only and confers no that the Certificate Holder has entity may have no legal rights or access
rights upon the no legal right to be covered by to the stated coverages. Insurance
Certificate Holder. This those policies. Regardless of companies can and do deny coverage to
3 Certificate does not what the Certificate states, only entities named as “additional insured” on
amend, extend or alter the terms and conditions in the the Certificate. This is why you need an
the coverage afforded by actual insurance policy are Additional Insured Endorsement; it
the policies below. applicable, and the Certificate changes the insurance policy, adding
does not legally change the your entity to the definition of Who Is
policy. Insured or Covered.
Insurers Affording The insurance companies This section does not indicate the
4 Coverage, Insurer A, issuing the policies stated on the financial condition of the insurance
Insurer B, Insurer C, Certificate. companies. Check A.M. Best’s rating at
Insurer D www.ambest.com for an A VII or better.
Coverages This section states the Most likely to be affected are the
insurance policies listed below aggregate limits. The only reliable way to
were issued to the insured and verify whether the limits have been
are subject to the terms, reduced is to obtain a current loss report
5 conditions and exclusions in from the insured for the policy period.
those policies. The limits shown
may be lower due to claims paid
during the policy period.
General Liability Liability arising out of the
insured’s premises or business
operations (while in progress)
6
and products it may produce or
its completed business
operations.
Commercial General The standard insurance policy An “X” should appear in this box
Liability issued to business because this type of policy provides
organizations, referred to as broad, standardized coverage. PDRMA’s
6a
CGL. insurance requirements specify this type
of policy.
Claims Made Term describing an insurance Occurrence forms are much more broad,
and policy that covers claims made and PDRMA specifies them in itss
Occurrence (reported or filed) during the insurance requirements. Claims made
6b
year the policy is in force for any forms limit coverage and are seldom
incidents that occur that year. used today for general liability coverage.
The exception to this is Professional
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

Liability insurance for architects/
engineers/lawyers, etc., which is
generally only available in the claims
made form.
General Aggregate Limit Term that indicates the If the Aggregate limit applies per project
Applies Per maximum amount the insurer or location, it is likely the full General
Policy will pay in a policy period. Liability limit will be available if a loss
6c
occurs. If the Aggregate limit is per
Project
policy, it is recommended the Aggregate
Location limit be 2x the General Liability limit.
Policy Number The number assigned to a This area should not be blank; all
particular policy when issued to policies have numbers when issued. In
help identify what policy was in lieu of a policy number, a Binder number
place at the time of a loss. may appear. This means the coverage
6d was obtained, but the actual policy is yet
to be issued. A follow-up Certificate
should be issued showing the actual
policy number within 60-90 days.
Policy Effective and States when coverage begins Always look at this section carefully to
Expiration Dates and ends. insure the policy has not expired. If the
work or contract will go beyond the
policy expiration date, require another
6e Certificate that shows coverage meeting
the original requirements has been
continued or obtained.
Each Occurrence The most the insurance policy Additional amounts of insurance may be
6f will pay for all losses that arise available under other insurance policies
out of one accident or incident. the insured may have purchased.
Damage to Rented The most the liability policy will A reduced limit – such as $50,000 – may
Premises pay if the insured causes be provided. If the contract involves
damage due to specific named rental or lease of public property valued
6g
perils to the premises it rents or at more than $50,000, or in a facility
leases. valued more than that amount, additional
insurance may be required.
This is coverage that reimburses This coverage pays for minor injuries to
Medical Expenses others, whether the insured deter the injured party from hiring a
party has done anything wrong, lawyer or filing a lawsuit. A small amount
6h
for medical expenses incurred of coverage is provided – usually $5,000
for injuries. – and it is often included as part of the
commercial liability policy.
Personal and Advertising Provides coverage for harm This coverage is normally provided as
Injury other than bodily injury such as part of the standard commercial general
libel, slander, wrongful eviction, liability policy. Since the greatest risk
6i
false arrest, malicious has been physically injuring someone or
prosecution and invasion of damaging their property, this coverage
privacy. has not been of great concern. However,
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

some insurance policies now define
personal injury to include harassment
and/or discrimination (sexual, racial,
religious, etc.), so this may become a
greater concern.
General Aggregate The maximum amount of PDRMA’s insurance requirements state
insurance payable during any that if the insurance policy contains a
annual policy period for all general aggregate limit, that limit shall
6j
losses other than products and apply separately to this particular job or
completed operations. location. This is done with a special
endorsement added to the policy.
Products – Completed The maximum amount of Once a job has been completed,
Operations Aggregate insurance payable during any coverage normally would not be
annual policy period for losses provided to the additional insured. If
arising out of the insured’s continued liability coverage is desired
6k products or business operations after the job is complete, the contract
conducted away from the should require this for a specified time
insured’s premises once those period (1 or 2 years for example) and
operations have been completed subsequent Certificates of Insurance
or abandoned. obtained from the contractor.
Automobile Liability Provides insurance for bodily It is NOT necessary to be named as
7 injury and property damage additional insured under the auto
liability arising out of the insurance policy, because the standard
negligent operation of vehicles. form already covers the public entity.
Any Auto Covers any auto, regardless of A check appears in the box next to the
ownership. type of auto insurance provided.

All Owned Autos Covers only autos and any ANY AUTO is the broadest coverage
attached trailers owned by the and is specified in PDRMA’s insurance
insured. requirements.

Scheduled Autos Covers only autos specifically If an organization does not own any
listed in the insurance policy. vehicles and wants to lease, rent or
7a-e
borrow a member’s vehicle, either Hired
Autos or Non-Owned Autos would be
appropriate.
Hired Autos Covers only auto that the
insured has leased, hired,
rented or borrowed.

Non-owned Autos Covers only autos the insured

does not own, lease, hire, rent
or borrow when used for the
insured’s business purposes.
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

Combined Single Limit The most the policy will pay for PDRMA specifies this type of limit in its
7f both bodily injury and property insurance requirements, because the full
damage combined. amount can be used for either bodily
injury or damage to property.
Bodily Injury (per person) The most the policy will pay for Combined single limit is recommended,
7g bodily injury to one person so this section would not apply.
arising from one accident.
Bodily Injury (per The most the policy will pay for Combined single limit is recommended,
7h accident) bodily injury arising from one so this section would not apply.
accident, regardless of the
number of people injured.
Property Damage (per The most the policy will pay for This does not cover damage to the
7i accident) property damaged as a result of insured’s vehicle.
the accident.
Garage Liability Insurance coverage for auto PDRMA recommends requiring this
businesses (dealers, repair coverage if a public entity is storing
shops, service stations, storage vehicles in a storage garage or if
8
garages, etc.) for damage to vehicles are on the premises and under
customers’ vehicles in their care, the custody of an auto business.
custody and control.
Excess Liability An insurance policy that The amount of insurance shown under
provides coverage in addition to the policies listed in 6, 7 and 10, plus the
9 the general liability policy amount shown here, is the total amount
referred to in item 6. of liability insurance available for each
occurrence.
Umbrella Form A policy that protects against
catastrophic losses. It is
generally written over various
other liability policies the insured
purchases such as general
liability, automobile liability,
water or aircraft liability and
9 employer’s liability. It provides
more insurance when the limits
of the underlying policies have
been exhausted by the payment
of claims, additional insurance
when the aggregate limit of any
underlying policy has been
exhausted, and protects against
some claims not covered by
underlying policies.
Any deductible or self-insured
9b-c
retention is listed here.
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

Each Occurrence The most the insurance policy Add the dollar amount listed here to the
9d pays for all losses arising out of dollar amount in 6I, 7F and 10C for the
one accident or incident. total amount of liability insurance
available for each occurrence.
Aggregate The maximum amount of Amount may be less than shown due to
9e insurance payable during any claims already made during the policy
annual policy period. period.
Worker’s Compensation Coverage provided to an The extent of workers compensation
and Employers Liability employer for injuries or illnesses insurance is specified by state law and is
suffered by employees arising generally standard. However, employer’s
out of their employment. liability coverage is very important to
public entities. If an injured employee of
the contractor sues another party
10 alleging that its negligence caused or
contributed to the injury, that party may
sue the public entity alleging that its
negligence caused to or contributed to
the accident. This coverage is especially
important in construction contracts or
contracts involving hazardous business
operations.
Any Proprietor/partner/ States whether the insured’s If the business has no employees other
10a executive officer/member owners and officers are than the owner, the business may not
excluded? excluded under the company or have worker’s compensation insurance
organization’s worker’s because it has no employees.
compensation policy.
Statutory Limits An “X” in front of the description This is the best type of coverage
means the policy will pay all because it provides the highest limits
covered expenses and disability available regardless of the number of
that can be awarded under state injuries or incidents of illness or the
law to an injured or ill employee. amount of claim made under the policy.
10b-e
E.L. Each Accident The most that the Employer’s This specifies the amount of insurance
E.L Disease – Each Liability portion of the coverage available under the employer’s liability
Employee will pay for each accident, for part of the insurance policy.
E.L. Disease – Policy disease in total or for each
Limit employee.
Other This section indicates if the This section should state that the public
insured purchased other types entity was added as additional insured
of insurance policies such as with an Additional Insured Endorsement
professional liability, water or to the policy. Simply being named
11 aircraft liability, etc. “additional insured” does not ensure the
endorsement has been added to the
policy. A copy of the Endorsement
should accompany the Certificate.
 SAMPLE CERTIFICATE OF INSURANCE – HOW TO READ

Item Explanation Comment

Description of This section describes any This section also indicates whether an
Operations/Locations/ special operations that may entity has been added as additional
12 Vehicles/ Exclusions occur, a specific job location, or insured to the liability policies.
added by endorsement/ site on which activities will take REMEMBER: This should state that the
special provisions place. additional insured ENDORSEMENT has
been issued.
Certificate Holder The entity to whom the The Certificate Holder is not entitled to
certificate has been sent or any rights under the policy and must be
13 issued. named additional insured through
execution of the Additional Insured
Policy Endorsement.
Cancellation States the amount of written This is an important clause, because if
notice the certificate issuer will the insured fails to pay the policy
try to give the Certificate Holder premium or does something else that
if any policies are canceled prior results in cancellation, the public entity
to the expiration date. However, can receive notice of this cancellation.
failure to do so will not result in To rectify the problem that the Certificate
liability if notice is not given. issuer is not required to provide notice of
cancellation to the Certificate Holder, a
request can be made to cross out the
14
“Endeavor to” phrase as well as the last
sentence beginning “But failure to
mail…”

PDRMA’s insurance requirements

specify 30 days’ notice be given. Some
Certificates indicate only a 10-day
notice, because this is the maximum if
the insured does not pay the policy
premium.
Authorized The individual who has been Not all insurance agents or brokers are
Representative given the authority to sign the authorized to sign or issue a Certificate
Certificate. This may be the on behalf of the insurance companies
15
insurance agent or broker, or a providing the coverage.
representative of the insurance
company.