ACORD 25 is just one of the many types of Certificate of Liability Insurance. It is a contract between you as the insured and your insurance company. In the certificate, it details the type and amount of insurance you have. It also provides contact information for the insurance company. Another important aspect of the certificate are the listed parties. Any person named on the certificate is protected by the policy.
It is important to remember that your certificate does not add to your insurance policy in any way. When the insurance company issues you a certificate, it is not a means for them to alter or add to your policy. It is simply a summary of your insurance coverage.
When you have a certificate, it will probably say something like, “issued as a matter of information only, and confers no rights upon the certificate holder. This certificate does not affirmatively or negatively amend, extend, or alter the coverage afforded by policies“. This limits the way that the certificate can be used.
- You cannot show someone your certificate and expect it to grant you certain rights. It is not a contract; its purpose is to provide information.
- You can only use it to verify that your insurance policy contains liability coverage.
- If your name is not on the certificate, either as the primary policyholder or an additional insured, then you are not covered. In order to be added to the certificate, you need to contact the insurance company that first issued it.
The non-profit organization, ACORD, itself is the main provider of forms such as the certificate of liability to Property and Casualty Insurance carriers. So, it should be no surprise that people often purchase a certificate of liability for casualty situations.
Imagine that you own a local gift shop downtown. You moved your business into its current location because of the high level of foot traffic and the interest in the unique items that you sell. However, the building is over 100 years old and could use a makeover. So, you hire a company to remove the plaster-covered walls that have numerous cracks and replace them with sheetrock. But, you want to make sure that you are protected.
In order to cover your assets and make sure that you hire a construction company that you can trust, you require them to have a certificate of liability with a $1 million “per occurrence” limit and a $2 million “general aggregate” limit. This means that if the construction company causes more damage or does not do the job as required, both of you are protected.
When you hire the construction company, you ask them to show you their certificate of liability. This will show you which insurance company issued the certificate, and the provisions of the policy.
Until 2009, the language used on certificates of liability regarding cancellation was a bit vague. It stated that, “if any of the policies was cancelled before its intended expiration date, the insurer would ‘endeavor’ to notify the certificate holder a specified number of days in advance.” The insurance company did not necessarily adhere to this. Rather, they would follow the requirements listed in the actual policy and not the certificate.
Since 2009, insurance companies are required to notify you if the certificate is cancelled midway through the policy term. If you are listed as an additional insured, you will only be notified if the policy specifically states it as such.
Speak to Your Insurance Agent
Please note that if you plan to lease or purchase a vehicle, make sure that you receive an Acord 23, not Acord 25 liability certificate. The Acord 23 has been written specifically for automobiles. It provides information about liability and physical damage coverage on your insurance plan.
Speak to your local, independent insurance agent about obtaining a certificate of liability insurance today. They will have the knowledge and expertise to provide you with the best policy and certificate to suit your needs.
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