How to Spot a Fake Certificate of Insurance
Requiring
a certificate of insurance (COI) is an important step to ensure your assets are
protected in the hands of others. These certificates are used to confirm that
companies or individuals have proof of insurance. Coverages should be active
and adequate for the items that they are renting, as well as listing your
company as an ‘Additional Insured
and Loss Payee’.
Key Elements of a Certificate of Insurance
Most certificates of insurance are written on ACORD 25 forms. ACORD 25 forms are published in accordance with all state insurance requirements. Only the most current version of Acord forms should be accepted b. The following sections of the form should be reviewed for accuracy:
- Producer: Verify that the producer information is accurate and truthful. Call the insurance company, or broker, listed on the form using publicly available information to confirm that the information is accurate. Look for policy number, insured name, policy limits and expiration dates.
- Insured: Make sure the customer is who they say they are. Request business cards, look up the insured online and confirm their business location.
- Insurer(s) Affording Coverage: Contact the insurance company to verify that the policy is up to date. Be sure to check if the insurance company is permitted to operate in your state by visiting the NAIC.
- Commercial General Liability: Confirm that the policy effective dates are accurate, and that coverage will not expire within 30 days of the rental. Verify that limits of insurance accurately reflect your organizational requirements.
- Other: Confirm that the insured provides inland marine and/or rental equipment insurance coverage equal to or greater than the replacement cost of rented camera equipment.
- Description: Verify that the insured has listed your organization as an additional insured and loss payee as well as specific information on coverage provided.
- Certificate Holder: Confirm your organization is listed as the certificate holder and the contact information is correctly listed.
To learn more about the contractual and coverage requirements of a COI, visit our article on how to Manage Your Risk with Certificates of Insurance.
How to Verify the Accuracy of a COI
Many certificates come directly from insureds, this increases the possibility that they could be falsified. While looking at the certificate there are a few signs that they may not be accurate or valid:
- Certificates not filed using ACORD forms - All fields on other forms should match those on ACORD forms. When receiving these forms, contact the broker listed to confirm that insurance is in force.
- Verify the insurance company listed is real and reputable - Look for the name of common or local insurance companies. Verify by using the NAIC database. While checking this list, be sure to confirm that they are licensed to operate in your state. AM Best provides financial ratings for insurance companies. Require customers to provide insurance coverage from companies with an AM Best rating of "B" or higher..
- Look for consistent handwriting and spelling errors - The majority of certificates will be typed with the exception of endorsements that may be handwritten by brokers or agents. When looking at the certificate, be sure to check for what may look like edits. Ex: White-out marks, crossing out, spelling errors, etc.
It’s important to note that certificates of insurance are considered informational documents and that amendments do not necessarily reflect accurate coverage.
Example: A customer provides your business with a certificate of insurance, and you are not listed as an additional insured. The customer amends the form with a pen to include your business name and you accept the certificate. While the form may be correct, the underlying policy has not been amended by the agent or broker to include you as an additional insured and can potentially create a coverage discrepancy.
Example: You receive a certificate from a customer, and you notice that the limits of insurance have been whited out and the limit is listed at $2,000,000. You ask the customer, and he states that “This is an old copy and my broker has increased the limits but did not give me a new form so I changed it myself”. The customer may be truthful, but it is important that the information on the certificate be confirmed by the agent or broker and a new form be filed.
Organizations that handle large amounts of certificates can consult with 3rd party providers who provide tracking software that helps to manage certificates. These providers can manage expiration dates, policy requirements, emails to agents/brokers and upload to portals.
