Certificate review for Contract insurance requirments

A Certificate of Insurance is a document that evidences for one party the insurance coverage(s) held by another party. It is not an insurance policy and it does not provide any coverage to the certificate holder. Moreover, all certificates contain the following disclaimer on the reverse side:

The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon.

Contractual Insurance Requirements and Certificates of Insurance

Insurance requirements are present in most contractual agreements. The Office of Risk Management (ORM) can help you determine the limits to require for certain exposures based on the level of risk.

Certificates from Other Parties

When other parties provide the University with a certificate of insurance, you need to verify that all insurance requirements have been met. This needs to be done on a line by line basis. What is the contractual requirement, versus what is represented on the certificate of insurance? ORM can assist you with this task. It is always preferred that ORM review contracts prior to them being signed to verify that the correct insurance specifications are being asked for and the correct limits are being required.

Acord Certificate Quick Tips (Please view example Quick Tips below)

The following are the parts of a certificate of insurance:

  1. Producer – Produces or orders Certificates for the insured; answers questions, revises certificate to meet the contract requirements.
  2. Name of Insured – Must be the legal name of contracting party.
  3. Types of Insurance – Must include types required by contract
  4. Policy Form – Will indicate claims-made or occurrence form; see “8 Policy Expiration Date” for additional information.
  5. Named additional Insured – The certificate must state, either under Description of Operations or by attached endorsement, that the Board of Regents of the University of Texas System and any participating institution are additionally insured. On the certificate disclaimer there is the following language – If the certificate holder is an Additional Insured, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).
  6. Certificate Holder: Must be the Board of Regents of the University of Texas System; address must include institution, department, contact person.
  7. Policy Effective Date – Must be prior to or coincidental with effective date of contract.
  8. Policy Expiration Date – for “occurrence” form coverage, date should be on or after the termination date of contract; if “claims-made coverage”, coverage must survive for a period not less than three years following the termination of contract and shall provide for a retroactive date of placement proper to or coinciding with the effective date of contract.
  9. Limits of Insurance – Must be same or greater than required by contract.
  10. Description of Operations – Review information in this section to determine it is consistent with contract.
  11. Notice of Cancellation – This language must be modified to read: “Should any of the above described policies be cancelled before the expiration date thereof, the issuing company will mail 30 days notice to the certificate holder named to the left.”
  12. Authorized Representative – Must be signed by an authorized representative of Producer.
  13. The companies who are affording coverage – ORM can assist you in determining if the carriers used meet our financial size and strength rating criteria. We require using insurance carriers with a minimum A.M. Best Rating of A-: VII.
  • Coverage - the coverage section of the certificate includes liability or property insurance depending on the type of coverage required and provided.
  • Coverage Section disclaimer – The policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term or condition of any contract or other document with respect to which this certificate many be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies. Aggregate limits shown may have been reduced by paid claims.
  • The coverage section includes the following areas:
  • Type of insurance, policy number, policy effective date, policy expiration date and limits.
  • Under the Certificate of Liability the following are the types of insurance offered:
  1. Commercial General Liability written on a claims made or occurrence basis
  2. General aggregate limit that applies on a policy, project or location basis
  3. Automobile Liability written on a combined single limit basis (each accident) or split limit basis (Bodily injury – per person, Bodily injury – per accident and Property Damage – per accident) for any auto, all owned autos, scheduled autos, hired autos, and non-hired autos.
  4. Garage Liability
  5. Excess/Umbrella Liability written on a claims made or occurrence basis with an each occurrence limit and aggregate limit. There is normally a deductible or retention when the loss is not following form. If the loss is following form normally a deductible/retention does not apply.
  6. Workers Compensation and Employers’ Liability are written in separate parts of the workers compensation policy. Workers Compensation is written with statutory benefits of the state the policy holder is domiciled in. Employers’ liability is written at different limits. A waiver of subrogation is typically required by the Board of Regents of the University of Texas System. All certificates have a disclaimer page on the reverse side of the certificate page. It states that if subrogation is waived, subject to the terms and conditions of the policy, certain policies may require and endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).
  7. An “other” row is made available for coverage that are not normal coverage types for liability or when different policy types are trying to be consolidated onto the same certificate. Could include professional liability or property policies.

U.T. System requires at least the following limits for the exposures outlined below. These limits should be placed with a company licensed to do business in the state of Texas with an A.M. Best Rating of A-,VII or better.

Property Insurance – First party insurance that indemnifies the owner or user of property for its loss, or the loss of income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion. This insurance can cover contents (personal property) as well.[1]

Appropriate wording for the property insurance requirement follows:

Please contact ORM for help with this provision (depends on the contract being signed).

General Liability – Insurance protecting commercial entities from most liability exposures other than automobile and professional liability.[2]

Appropriate wording for the general liability insurance requirement follows:

Commercial General Liability Insurance with limits of not less than:

Each Occurrence Limit$1,000,000

Damage to Rented Premises$ 100,000

Medical Expenses (any one person) $ 10,000

Personal & Advertising Injury $1,000,000

General Aggregate $2,000,000

Products - Completed Operations Aggregate $2,000,000

The Board of Regents of the University of Texas System and the contracting institution must be named as additional insured. The policy must be endorsed to reflect the additional insured status.

Business auto coverage form – Insurance that protects the insured against financial loss because of legal liability for automobile related injuries to others or damage to their property by an auto.[3]

Appropriate wording for the auto liability insurance requirement follows:

Business auto coverage form covering all owned, non-owned or hired automobiles, with coverage for at least $1,000,000 each accident limit Bodily Injury and Property Damage. The Board of Regents of the University of Texas System and the contracting institution must be named as additional insured. The policy must be endorsed to reflect the additional insured status.

Workers Compensation and Employers liability – An insurance policy that provides coverage for an employer’s two key exposures arising out of injuries sustained by employees. Part One of the policy covers the employer’s statutory liabilities under workers compensation laws, and Part Two of the policy covers liability arising out of employees’ work-related injuries that do not fall under the workers compensation statute. Employers’ liability coverage pays on behalf of the insured (employer) all sums that the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease sustained by any employee of the insured arising out and in the course of his employment by the insured.[4]

Appropriate wording for the workers compensation requirement follows:

Workers Compensation Insurance with statutory limits and Employers Liability Insurance with limits of not less than $1,000,000:

Employers Liability - Each Accident$1,000,000

Employers Liability - Each Employee$1,000,000

Employers Liability - Policy Limit$1,000,000

Policies must include (a) Other States Endorsement to include TEXAS if business is domiciled outside the State of Texas, and (b) a waiver of all rights of subrogation and other rights in favor of University must be endorsed onto the workers compensation policy.

For additional Certificate Review for Insurance Requirements information specific to UT System, please contact the ORM Risk & Insurance Analyst.

The University of Texas System · Office of Risk Management

Certificate Review for Contract Insurance Requirements

Last Updated March 2, 2009

1

[1] Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute, Inc.; 2007.

[2] Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute, Inc.; 2007.

[3] Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute, Inc.; 2007.

[4] Glossary of Insurance and Risk Management Terms, Eleventh Edition, International Risk Management Institute, Inc.; 2007.