18 Nov Certificates of Insurance Ride Again!
Sometimes I think all my blogs could deal with certificates of insurance. Here is a question I recently received. I have received it many times before.
I have a relatively new insured who was a little frustrated that he must call us every time he needs a COI sent to a potential customer.
My question is the reasoning why we should never send a “blank” COI or a COI with the insured’s name/address listed as a COI holder. It’s a question I’ve been asked over the years, and I always tell them… “It’s the rules, and we are not allowed to send a blank COI or a COI with the insured’s information listed as the Certificate Holder,” but I don’t have a quality response as to why. I’d like to provide them with a more informed response.
Can you give me the reasons why we should never do this? Well, here you go.
Sending a blank certificate of insurance is a serious mistake for any insurance agent. Here’s why it’s not just risky, but potentially unethical and legally problematic:
Legal & Regulatory Risks
- Most state insurance departments prohibit the issuance of incomplete or misleading insurance documents. A blank COI can be seen as a misrepresentation.
- A blank certificate could be altered or filled in by unauthorized parties, leading to fraudulent claims or misrepresentation of coverage.
- Agents could face E&O claims if the blank COI is used improperly and results in financial harm.
Breach of Professional Standards
- Clients and third parties rely on COIs to verify coverage. Sending a blank one erodes credibility and professionalism.
- Insurance carriers often have strict guidelines about how and when certificates can be issued. A blank COI may breach those terms.
- A blank certificate fails to fulfill its purpose – confirming that specific insurance policies are in place.
Practical Consequences
- Many contracts require proof of insurance with specific limits, endorsements, and named insureds. A blank COI could delay projects or violate contract terms.
- Clients may mistakenly assume coverage exists where it doesn’t, leading to disputes or uncovered losses.
- Businesses often require COIs for audits or regulatory compliance purposes. A blank one could trigger penalties or failed inspections.
Best Practices Instead
- Always verify coverage before issuing a COI.
- Include all required details: policy numbers, limits, effective dates, and named insureds.
- Use approved templates and systems provided by carriers or brokers.
- Educate clients on what a COI does – and doesn’t – represent.
Remember that many E&O claims now involve certificates of insurance. It’s bad enough when we get sued for legitimate certificates. Why risk being sued for illegitimate ones? In the immortal words of former First Lady Nancy Reagan, “Just say no.”