Certificates of insurance
Know what a COI actually proves before you file it away and move on.
A certificate of insurance (COI) is a document, not a policy. It shows what type of coverage and what limits a vendor had on the day the certificate was issued. It does not guarantee that coverage is still active later, does not add your association to the vendor's policy, and does not itself transfer or reduce your association's risk.
A snapshot, not a guarantee
When your association hires a landscaper, a roofer, or a management company, the contract usually requires that vendor to carry insurance and to hand over a certificate proving it. That certificate lists coverage types, limits, and an effective date. It is issued by the vendor's insurance agent, not by the board, and not by the insurer's claims department.
"The certificate of insurance is a document providing evidence that certain general types of insurance coverages and limits have been purchased by the party required to furnish the certificate."
Source: IRMI Glossary of Insurance and Risk Management Terms, "certificate of insurance", International Risk Management Institute
What it does not prove
The certificate confirms coverage existed on one date: the day it was issued. It says nothing about whether the vendor kept paying premiums the following month, whether the policy was later canceled, or whether the vendor's contract with your association actually changed anything about the policy itself.
"certificates of insurance only certify coverage existed on the day the COI was issued"
Source: "The Limitations of Certificates of Insurance," by Wade Millward, Risk Management Magazine (RIMS)
A board that files the certificate and never looks at it again has confirmed a fact about the past, not a guarantee about the present. This matters most on multi-month projects, where the certificate in the file may be older than the work still underway.
How to use a COI well
Check the effective date and the expiration date every time, not just the coverage types. If a project runs longer than the policy period shown, ask for an updated certificate before work continues, not after a loss happens.
A certificate is also not the same thing as being named an additional insured on the vendor's policy. Whether your association actually holds that status depends on the endorsement attached to the vendor's policy, and the specific endorsement forms carriers use differ in what they require and what they cover, so read the endorsement itself rather than assuming the certificate settles the question.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
The board files a landscaping contractor's certificate of insurance and moves on. Six months into the contract, the contractor's policy lapses. What does the certificate on file actually confirm?
A vendor contract requires general liability coverage, and the vendor's certificate lists that coverage. What has handing over the certificate itself changed about the vendor's actual policy?
A board wants real assurance that a contractor stays insured throughout a year-long project, not just at signing. Based on what a certificate actually is, what should the board do?
Sources
- IRMI Glossary of Insurance and Risk Management Terms, International Risk Management Institute
- "The Limitations of Certificates of Insurance," by Wade Millward, Risk Management Magazine (RIMS)
- "Including an HOA as Additional Insured on Contractors' CGL", IA Magazine (Big "I" Virtual University)
Related elsewhere in the Academy
Insurance
Next, learn what it actually takes to add your association as an additional insured on a vendor's policy.
Which endorsement a vendor's insurer uses, and whether it actually names your association as an additional insured, varies by contract, carrier, and policy form. Read the endorsement itself, and check your own vendor contracts for what proof of insurance they require.