By: William H. Short, Esq.

Many associations require their contractors to present certificates of insurance as evidence that the hired company has insurance. The certificate often used, called an ACORD certificate and contains information including, but not limited to the following:

  • basic policy details, such as policy numbers, descriptions, limits, deductible amounts, and identity of carriers;
  • provides that the certificate is issued as a matter of information only and confers no rights upon the certificate holder; and
  • further provides it does not amend, extend, or alter the coverage afforded by the policies listed.

It is important to understand however that contrary to popular belief these certificates often do not extend insurance coverage to associations. Colorado courts routinely hold that certificates of insurance are not a contract of insurance, but merely the evidence that a contract has been issued. The certificates are considered informational documents subject to limitations of the policies. Thus, unless the actual insurance policy names the certificate holder as an insured, the certificate of insurance does not create an insured relationship between the associations and their vendors’ insurance carriers.

There are some exceptions to this general rule, which depend upon the language of the certificate and whether the certificate has been endorsed by an agent of the insurance company. However, this is most often an exception to the rule and not regular practice.

The safest practice is to request and obtain from the contractor an additional insured (AI) endorsement specifically provided by the insurance representative and signed by the insurance agent. The AI endorsement actually modifies the insurance policy to add the association as an insured entity under the policy and allow the association to file claims under the policy.

However, if all your association received was an ACORD certificate, it will not likely be able to make claims under the contractor’s policy and should something go wrong, it will still have to go through the contractor who may or may not cooperate.

Please feel free to contact a Altitude Community Law attorney if you have any questions at 303.432.9999.