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Ask the Experts: Making Sense of Certificates

A company we work with just requested a certificate of insurance for an event. How do we respond? Who is the “certificate holder?”

 

The quick answer is, you send the request to us and we provide the necessary certificate. But like most things, this isn’t always quite that simple.

Certificate requests are very common for the CSD Pool and for insurance companies in general. Many third parties require verification of coverage when interacting with districts. These third parties can be lenders, banks, event planners, or even the DMV.

Typically, the outside organization will send the request to you, the district, and you send it on to us. While this is ideally a pretty simple transaction, both the Pool and the outside organizations often have requirements that can make it just a little more complex.

If detailed information is not included in the original request, we will typically ask why proof of coverage is needed and whether there are additional requirements. The certificate may require certain coverage for the third party that they either did not outline, or that was not passed along. Asking for this information helps us expedite the process for everyone.

Frequently, requests will include very specific wording, often asking the Pool to declare the outside party as an “Additional Insured” or asking for a “Waiver of Subrogation” endorsements. These types of requests change the relationship between the district and the outside party. That change of relationship is established in a written contract such as a lending agreement. In some instances, no written contract exists, so we aren’t able to provide that wording because those requirements are never legally defined.

Additionally, the CSD Pool is often asked to review the district’s written contract because it will assist legal counsel in providing all the necessary requirements and coverages to include. In the case of workers’ compensation, it is required for review by the excess carrier.

Contract review also helps with risk management in case the requirements are exceptionally less favorable to the district. We can assist the district’s own legal counsel in pointing out where the district should request complimentary requirements or outline deficiencies that can addressed directly with the party making the request or with the district’s attorney.

Remember, for any certificate request, it is important to provide as much information as possible in order for us to understand the district’s relationship with the third party.

CERTIFICATE TERMINOLOGY

Named Member

Any district, or any of its members designated by name as covered by the Pool’s coverage form, as distinguished from others that, although unnamed, fall within the policy definition of “covered member.”

Alternative

The district and any other named entities listed on the coverage declarations page.

Additional Covered Member

A person or organization not automatically covered as a Member under the Pool’s coverage document (policy) who requests to be added as a covered member (insured) under the policy at the request of the named member only as it pertains to a specific agreement, usually the third party.

Waiver of Subrogation

An agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss. The intent of the waiver is to prevent one party’s insurer from pursuing subrogation against the other party. This is usually a mutual agreement.

Primary and Non-Contributory

Some requests require that a district’s coverage be shown as primary and noncontributory. This means that if there is a loss, the Pool’s coverage will be primary and will not require the third party’s coverage to contribute payment for a loss.

Loss Payee / Mortgagee

A person or entity that is entitled to all or part of the proceeds in connection with the covered property loss in which it has a financial interest.

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