10 Common Mistakes on Certificates of Insurance and How to Avoid Them

Certificates of Insurance (COIs) serve as critical proof of insurance coverage in business relationships, but they're often riddled with errors that can lead to serious compliance issues and financial risks. Understanding these common mistakes on certificates of insurance is essential for risk managers, contractors, property managers, and insurance professionals who rely on these documents daily. In this comprehensive guide, we'll explore the most frequent COI errors, their potential consequences, and practical solutions to ensure your certificates properly protect your business interests.

Table of Contents

1. Understanding Certificates of Insurance
2. The 10 Most Common Mistakes on Certificates of Insurance
3. Best Practices for Certificate of Insurance Management
4. Implementing a Verification Process
5. Key Takeaways
6. Frequently Asked Questions

Understanding Certificates of Insurance

Before diving into the common mistakes on certificates of insurance, let's establish a clear understanding of what these documents are and why they matter. A Certificate of Insurance (COI) is a document issued by an insurance company or broker that verifies the existence of insurance coverage. It typically includes information about policy types, limits, effective dates, and named insureds.

COIs serve several critical purposes:

• Providing proof of insurance to third parties
• Confirming compliance with contractual insurance requirements
• Protecting businesses from liability claims
• Serving as documentation for risk management programs

Despite their importance, certificates of insurance are frequently completed incorrectly or misinterpreted, creating significant exposure for all parties involved. Let's examine the most common mistakes and how to address them.

The 10 Most Common Mistakes on Certificates of Insurance

1. Incorrect or Incomplete Additional Insured Status

One of the most frequent and serious mistakes on certificates of insurance involves additional insured designations. Many certificates simply state "Additional Insured where required by written contract" without specifying the endorsement form numbers that actually provide the coverage.

This creates two problems: first, there's no verification that the proper endorsement is attached to the policy; second, the scope of additional insured protection can vary dramatically depending on which form is used.

Solution: Always require specific endorsement form numbers to be listed on the certificate and request copies of the actual endorsements to verify coverage details.

2. Inadequate or Missing Waiver of Subrogation

Waiver of subrogation prevents an insurer from pursuing claims against other parties after paying a claim to the insured. Many certificates fail to indicate whether this important protection is in place, or they include vague language that doesn't confirm the actual endorsement exists.

Solution: Verify that the waiver of subrogation is clearly indicated on the certificate with the specific endorsement form numbers, and that it applies to all required policies (general liability, workers' compensation, etc.).

3. Insufficient Coverage Limits

Another common mistake on certificates of insurance involves policy limits that don't meet contractual requirements. This frequently happens when certificate holders don't thoroughly check the limits listed against their contract requirements, or when they misunderstand how aggregate limits work versus per-occurrence limits.

Solution: Create a checklist of required coverage types and minimum limits based on your contract, and systematically verify each one against the certificate. Pay special attention to the difference between per-occurrence and aggregate limits.

4. Missing or Incorrect Endorsements

Beyond additional insured status, many required endorsements are either missing or incorrectly noted on certificates of insurance. These might include primary and non-contributory endorsements, completed operations coverage, or specific endorsements required for your industry.

Solution: Develop a comprehensive list of required endorsements for your specific risk profile and verify each one is properly documented on the certificate with corresponding form numbers.

5. Expired or Soon-to-Expire Policies

Accepting certificates with policies that have already expired or will expire soon is a surprisingly common oversight. This creates immediate compliance gaps and potential uninsured exposures.

Solution: Implement a tracking system (manual or automated) that flags upcoming expirations and sends renewal requests well before policies expire. Many organizations are now using automated COI tracking software like CoverLedger to eliminate this risk entirely.

6. Improper or Missing Cancellation Notice

Standard ACORD certificates typically provide only a 30-day notice of cancellation, and many policies don't actually guarantee this notice will be provided to certificate holders. This is one of the most misunderstood aspects of certificates of insurance.

Solution: Request a policy endorsement that specifically requires notice to certificate holders, and have this endorsement referenced on the certificate. Be aware that the standard language on ACORD forms stating "...will endeavor to mail..." provides no guarantee of notification.

7. Incorrect Named Insured

Certificates often list abbreviated company names, DBAs, or incorrect legal entities as the named insured. This creates potential coverage gaps if the entity you're doing business with isn't actually the insured party on the policy.

Solution: Verify that the named insured on the certificate exactly matches the legal entity name in your contract. For complex corporate structures, request documentation showing the relationship between entities if different names appear.

8. Mismatched or Missing Policy Numbers

Certificates sometimes contain typographical errors in policy numbers or missing policy numbers altogether. This makes verification of coverage impossible and creates problems when claims arise.

Solution: Ensure all policy numbers are included on the certificate and consider periodic verification of these numbers with the issuing insurance company, especially for high-risk relationships.

9. Overlooking Exclusions or Restrictions

Standard certificates of insurance rarely disclose policy exclusions or restrictions that could significantly impact coverage. For example, a general liability policy might exclude coverage for specific operations that are central to your contract.

Solution: For critical relationships, request and review actual policy endorsements and exclusions. Consider requiring written confirmation that no exclusions apply to the contracted work or services.

10. Relying on Certificates Without Verification

Perhaps the most fundamental mistake with certificates of insurance is treating them as definitive proof of coverage without additional verification. Certificates are informational documents only and do not confer rights to certificate holders.

Solution: Understand that certificates are starting points for verification, not endpoints. For important business relationships, implement a more thorough verification process that includes reviewing actual policy endorsements and periodically confirming coverage directly with insurers.

Best Practices for Certificate of Insurance Management

Avoiding common mistakes on certificates of insurance requires implementing systematic management practices. Here are key strategies to improve your COI handling:

Create Clear Insurance Requirements

Develop detailed, written insurance requirements for vendors, contractors, and business partners that clearly specify:

• Types of insurance required (GL, auto, workers' comp, professional liability, etc.)
• Minimum limits for each coverage type
• Required endorsements with specific form numbers
• Additional insured requirements
• Waiver of subrogation provisions
• Cancellation notice requirements

Establish a Standardized Review Process

Create a systematic approach to reviewing certificates of insurance that includes:

• A checklist matching your requirements
• Designated personnel responsible for reviews
• Documentation of compliance or deficiencies
• Clear communication protocols for addressing deficiencies

Implement Tracking and Renewal Systems

Maintain ongoing compliance by:

• Using automated COI tracking software (like CoverLedger) to monitor expirations
• Setting up automatic renewal requests 30-60 days before expiration
• Establishing escalation procedures for non-responsive parties
• Creating a system to flag policy cancellations

Provide Training and Education

Ensure that staff handling certificates of insurance understand:

• The limitations of certificates as informational documents only
• How to read and interpret ACORD forms
• Common red flags and mistakes on certificates of insurance
• The importance of endorsements and policy language
• When to escalate issues to risk management or legal departments

Implementing a Verification Process

To move beyond simply collecting certificates and truly verify insurance coverage, follow these steps:

Step 1: Initial Certificate Review

Perform a thorough initial review of each certificate against your requirements checklist, noting any discrepancies or missing information. Pay special attention to the common mistakes on certificates of insurance outlined earlier.

Step 2: Request Supporting Documentation

For critical relationships, request copies of actual policy endorsements that provide additional insured status, waivers of subrogation, and other key coverages. Remember that the certificate itself doesn't grant these rights—only the policy and its endorsements do.

Step 3: Verify Coverage Directly (When Necessary)

For high-value or high-risk relationships, consider direct verification with the insurance company. While insurers may have limitations on what they can disclose, they can often confirm basic policy information like effective dates and whether specific endorsements exist.

Step 4: Document Compliance or Exceptions

Maintain clear records of compliance status for each vendor or partner. If you accept exceptions to your standard requirements, document the business justification and any alternative risk mitigation measures implemented.

Step 5: Implement Ongoing Monitoring

Insurance verification isn't a one-time activity. Establish a system for monitoring compliance throughout the relationship, including tracking renewals and policy changes. Automated COI tracking software can dramatically improve efficiency and accuracy in this process.

Key Takeaways

• Common mistakes on certificates of insurance can create significant uninsured exposures and compliance issues.
• Certificates themselves provide information but don't guarantee coverage—only the policies and endorsements do.
• Additional insured status, waivers of subrogation, and cancellation notices require special attention and verification.
• Implementing systematic tracking and verification processes is essential for effective risk management.
• Automated COI tracking solutions can significantly reduce errors and administrative burden.
• Staff education about common mistakes on certificates of insurance is crucial for maintaining compliance.

Frequently Asked Questions

What is the difference between being a certificate holder and an additional insured?

A certificate holder simply receives proof that insurance exists but has no rights under the policy. An additional insured is actually covered by the policy and can file claims directly. Being listed as a certificate holder provides no protection; you must be specifically named as an additional insured on the policy itself through an endorsement to receive coverage benefits.

How can I verify if a certificate of insurance is legitimate?

To verify a certificate's legitimacy, contact the insurance agent or broker who issued it using the contact information on the certificate (not information provided separately by the insured). Request confirmation of the key details including coverage dates, limits, and endorsements. For critical relationships, you may also contact the insurance company directly to verify the policy is in force with the coverages indicated.

What should I do if I discover errors on a certificate of insurance?

If you identify mistakes on certificates of insurance, immediately contact the certificate provider (usually the insurance agent or broker) with specific details about the errors. Request a corrected certificate that accurately reflects the required coverages. Do not accept marked-up or manually altered certificates, as these modifications have no effect on the actual coverage. If corrections aren't made promptly, escalate to your legal or risk management team before allowing work to begin or continue.

How often should certificates of insurance be updated?

At minimum, certificates should be updated whenever policies renew, typically annually. However, you should also request updated certificates when there are significant changes to the relationship (new projects, expanded scope) or when your requirements change. For ongoing relationships, implement a system to track expiration dates and request renewals 30-60 days before policies expire to ensure continuous coverage compliance.

What are the consequences of accepting inaccurate certificates of insurance?

Accepting certificates with errors or omissions can lead to serious financial consequences. If a claim occurs and the expected coverage isn't actually in place, your organization may become responsible for costs that should have been covered by insurance. Additionally, accepting non-compliant certificates may violate your own contractual obligations or corporate governance requirements, potentially creating legal liability for directors and officers who have oversight responsibility for risk management.

Conclusion

Understanding and avoiding common mistakes on certificates of insurance is a critical risk management skill. By implementing thorough verification processes, maintaining systematic tracking, and educating staff about certificate limitations, organizations can significantly reduce their exposure to uninsured losses and compliance failures.

The complexity of modern insurance requirements and the volume of certificates many organizations must manage has led to increasing adoption of automated solutions. These platforms not only reduce the administrative burden but also provide more reliable verification and tracking than manual processes.

Automate your COI tracking in minutes with CoverLedger's intelligent verification system. Our platform automatically identifies common mistakes on certificates of insurance, tracks renewals, and provides real-time compliance reporting—eliminating the risk of human error and freeing your team to focus on strategic priorities.