Did you know that 40% of insurance agency errors and omissions claims are related to false information on certificates of insurance? That’s an astounding percentage when considering all of the other possible claims. It goes to show just how dangerous it can be to trust the COI without the supporting endorsements.
What is an Error or Omission (E&O)?
Errors and omissions are mistakes that are caused by not doing something that the professional (in this case, an insurance agent, broker, or an administrative assistant) should have done, or not including something such as an amount or fact that should be included. The end result is either documenting something incorrectly, or not at all.
Why They’re Dangerous For Your Organization
A recent IRMI article explains that the party issuing the certificate of insurance takes on potential professional errors and omissions risks when a COI materially misrepresents the actual insurance coverage in force, resulting in the certificate holder suffering an uncovered loss that would have been covered by the represented coverage on the certificate of insurance. It goes on to explain:
“The standard of care is elevated for the issuer of the certificate of insurance when there are specific insurance requirements in a contract and a specific format that the certificate of insurance must have. This situation is very common in construction contracts that require a contractor to specifically make the stakeholders they are working for additional insureds under the contractor’s liability insurance policies and to affirm that those specific parties are additional insureds on the certificate of insurance.”
How to Protect Your Organization From False Information on COIs
Unfortunately, false information on certificates can’t be prevented by your organization. As we’ve explained in previous posts, often times the individual doing the administration work on policies is often an employee who doesn’t have the insurance background necessary to be able to ensure that everything on the certificate is actually correct. Even if not intentional, it is all too easy for the admin to free form an error in the “Description of Operations” box. On top of that, if your third party vendors or subcontractors are submitting certificates themselves (instead of the agent), then the certificate may be fake, invalid, or cancelled, or, coverage may have been reduced.
While all of that sounds scary, there’s a very simple way to prevent false information from slipping through the cracks. How, you ask? It’s as easy as asking for the supporting documentation, such as endorsements in addition to the COI. Once you collect the endorsements, be sure to check the following:
- Review endorsements and verify names and spellings are correct
- Review additional insured endorsements and verify the correct status:
- Ongoing Operations: Additional insured status while working; As soon as an individual walks off the job site the status is completed
- Completed Operations: Coverage when work is completed
- Review endorsements and verify they are attached to the insured’s current policy.
- Review blanket endorsements and verify there is no limiting language that would remove your company as a covered entity
Eliminate Your Certificate of Insurance Risk
myCOI is a cloud-based software solution that exists for one reason: to help you handle the everyday tasks of managing certificates of insurance and protecting your company against underinsured claims, costly litigation and failed audits. The software and certificate tracking services are combined into an easy-to-use program developed and supported by a team of insurance professionals and built on a foundation of insurance industry logic to automate the COI communication process and ensure you remain protected.
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