Certificates of Insurance: A Primer
A certificate of insurance is proof that an organization is covered under an insurance policy. The certificate of insurance should not be mistaken for an actual insurance policy. It does not provide, endorse, amend, extend or alter the terms of a policy.
As a parish business manager or institutional official, you are in a position to both request and provide a certificate of insurance. Let’s look at some common examples.
You may be asked to provide a certificate of insurance if you plan to take a group of students on a field trip to tour a municipal recycling facility for Earth Day. The municipality wants you to visit, but doesn’t want to be responsible if one of the students is injured. The facility will ask you for proof of insurance to cover possible damage to the equipment or the students.
Typically, certificates of insurance are requested by:
- Municipalities
- Service providers
- Parties to lease or use agreements
- Athletic facilities, camps
You may need to request a certificate of insurance from a vendor or contractor who is providing services to your parish or institution or any non-parish organization that uses your premises. Examples of organizations include local athletic leagues that play on the school fields or in the gymnasium and Knights of Columbus or Alcoholics Anonymous groups that hold regular meetings at the parish.
Snow removal and maintenance contractors, food service vendors and catering services must give you a certificate of insurance. This protects the parish and the diocese and ensures there are adequate, non-church funds available to respond to claims that may arise from a vendor’s work at the parish.
Construction projects at the parish require a certificate of insurance that indicates the contractor carries workers’ compensation and general liability coverage. The liability insurance protects the parish in the event the contractor’s negligence causes injury to a third party.
Whether you provide or request the certificate of insurance, you must check the effective dates of the underlying insurance policy to make sure it will be in effect for the duration of the project.
It’s always a good idea to ask vendors and user groups for Additional Insured Status. This is a straightforward procedure that reduces the likelihood of conflict between insurers in the event of a claim. In general, two insurers cover the claim, but the primary insurer is the vendor’s or user group’s. This prevents headaches for the parish. Make sure the certificate names your parish, school or institution, as well as the Roman Catholic Archbishop of Boston, a Corporate Sole, and Cardinal Sean O’Malley as additional insured.
Ask for proof of Workers’ Comp coverage if a business, such as a caterer, will use your premises and has employees working there. Two million dollars is the preferred amount. Also, if a company plans to operate motor vehicles or equipment on your premises, the company must have both workers’ comp and auto insurance. If an employee is injured, he or she may still have a valid claim against the parish, but workers’ comp would respond first and pay medical expenses and lost wages. Employers are required to maintain workers’ comp.
Rarely, a vendor may ask the parish for proof of workers’ comp, if the parish is using someone else’s facility and has parish employees present. If a vendor makes this request, please contact the Office of Risk Management to discuss.
General Liability Coverage on a Certificate of Insurance
Check the fine print!
Make sure General Liability coverage on the certificate of insurance is “occurrence-based” and not “claims made.”
“Claims-made” coverage is limited to the period that a specific insurer wrote the policy for a location. It may not cover claims reported after-the-fact, if the insurer has changed.
“Occurrence-based” coverage responds to any claim that occurs during the policy period, regardless of when it is reported. If an incident happened in 2012, while a policy was in place, the policy would still respond to a claim made in 2014, even if the insurer changed between the event and the claim.
Do not accept a certificate of insurance that is “claims-made.” Insist on one that is “occurrence-based.”
How Much Coverage Do We Need?
General liability: the minimum recommended amount is $2 million, although specific operations, vendors or circumstances may warrant higher limits.
Workers’ Comp: the minimum is $1 million but we recommend $2 million.
Auto: the minimum for commercial vendors is $1 million, but high-occupancy vehicles require more, including $2 million for vans and $10 million for buses. Limits above $1-2 million may be provided in an umbrella policy, which offers the same coverage, written as an extra layer that sits above the existing policy.
As always, if you have any questions about a certificate of insurance request, or if you need to request a certificate and are unsure of the process, please contact the Office of Risk Management.