Certificates of insurance, and what to actually require

What is a certificate of insurance and what does it actually prove?

A certificate of insurance is a snapshot showing that a policy existed on the date it was issued, and it is not a contract, not a guarantee of coverage, and not proof that the policy still exists today.

The certificate is evidence, not protection. The protection comes from the policy and from the endorsements attached to it, and a certificate can accurately describe a policy that will not respond to your claim.

This is why the endorsement matters more than the certificate. Additional insured status has to be granted by an endorsement on the vendor's policy. A certificate that lists you in the description box without a corresponding endorsement gives you nothing.

What coverages should a facility services vendor carry?

For commercial facility services the working baseline is general liability, workers' compensation, auto liability and umbrella, with limits set by your building's risk rather than by an industry rule of thumb.

• Commercial general liability

  Covers third-party bodily injury and property damage. Check both the per-occurrence limit and the general aggregate, because an aggregate shared across every client can be exhausted before your claim.

• Workers' compensation

  Non-negotiable. Without it an injured vendor employee on your property can become your exposure. Ask for the experience modification rate as well, since it is the one number that reflects actual safety record.

• Commercial auto

  Vendor vehicles on your property and in your parking structure.

• Umbrella or excess

  Sits above the underlying limits. Where high limits are required this is usually how they are reached.

• Professional liability

  Where the vendor is advising on design, engineering or compliance rather than performing labour.

• Pollution liability

  Relevant for pressure washing with runoff, chemical handling and industrial sites.

What should the certificate itself say?

The certificate must name your legal entity exactly, show additional insured status by endorsement, state whether coverage is primary and non-contributory, and confirm waiver of subrogation where your contract requires it.

• Correct named insured

  The vendor's legal entity, matching the contract. A certificate for an affiliate is a certificate for a different company.

• Correct certificate holder

  Your legal entity, spelled exactly. Ownership entities and management companies are not interchangeable.

• Additional insured by endorsement

  Reference the endorsement form number. Text in the description box is not an endorsement.

• Primary and non-contributory

  Determines whether their policy responds before yours or shares with it.

• Waiver of subrogation

  Prevents their insurer from coming after you after paying a claim.

• Policy period

  Check the dates. A large share of certificates on file at any given moment are expired.

• Notice of cancellation

  Understand what notice you actually get, since standard certificate language usually promises less than owners assume.

How do you keep certificates from going stale?

Track expiry dates centrally with a renewal reminder ahead of each date, because the standard failure is not a vendor without insurance, it is a vendor whose certificate lapsed nine months ago and nobody looked.

Set the reminder 30 days before expiry, not on the expiry date. Chasing a certificate after it has lapsed means running uninsured for the days in between.

Ask for the certificate to be issued directly by the vendor's broker rather than forwarded by the vendor. It removes a category of problem entirely.

What limits should you require?

There is no universal answer, and any vendor or article giving you one without knowing the building is guessing.

Limits should be set against the actual exposure: building value, occupancy, the trades involved, height of work, and whatever your own carrier and lender require of you. High-rise glass work at height and a single-story retail lot are not the same risk.

The right process is to ask your risk advisor or carrier what they want to see for the specific scope, put that number in the solicitation, and treat it as a qualifying condition rather than a scored criterion. A vendor who cannot meet it is not a cheaper option, they are not an option.