Q: An agency received a certificate of insurance request from a general contractor that asked the agent to certify an owner-controlled insurance program. How should the agency respond? And how can agencies curb the trend of COI requests becoming more and more onerous?

Response 1: Remember that you are only providing a snapshot of information. You should never make any comments about the coverages beyond what is on the COI, especially in the comments section. In many states, COIs are filed forms and no changes are permitted—and this includes expanding on the coverage offered in the policy form. In my state, it is a Class B felony for the agent to do so, and even for the party to request it.

If all else fails with simply issuing a standard COI, request permission of the insured to send the certificate-holder a copy of the policy and let them figure it out. You are under no obligation to the certificate holder.

Response 2: This is not an unusual request when your insured is involved in an owner-controlled insurance program, which is providing primary coverage for all tiers. “Contractors bidding on work to be performed under a controlled insurance program—a so-called wrap-up, in which the owner and all participating contractors are covered under a single liability policy—ordinarily do not maintain coverage for the wrap-up operations under their own CGL policy," IRMI explains. In any event, contractors bidding on wrap-up work are usually required to deduct their insurance costs from the bid.

The standard tool for excluding work performed under a wrap-up from a contractor's general liability policy is the Designated Operations Exclusion Endorsement (CG 21 54). You can also use CG 21 31, the Limited Exclusion for Designated Operations Covered by a Consolidated Wrap-Up insurance program, which “preserves coverage in connection with the insured's work performed under a wrap-up when the wrap-up policy itself has been canceled, has expired, or is otherwise no longer available to the insured contractor for reasons other than the exhaustion of the wrap-up policy's limits."

Response 3: I've written articles and conducted seminars for over 20 years with dozens of examples of outrageous insurance requirements and COI requests. Search the Big “I" Virtual University and check out the on-demand webinars about COIs.

Response 4: Last time I looked, every state had either an insurance department rule or a state law regulating what can be on a COI. Have you contacted your state association to see if there is one for your state?

Response 5: Unfortunately, you can't curb the trend of ridiculous COI requests. You can, however, provide consultation and educate your client so they can try to negotiate reasonable terms. Also, offer options to broaden coverage when it is available.

Make sure that you inform your client—and document, document, document—that you can only provide the insurance they purchased from you, and it might not—will not—provide all the required coverages or terms. Your insured can sign any contract they want, but don't forget to tell them that they will be self-insured for any uninsured terms and conditions.

Lastly, always end any statement of coverage that you insert on a COI with: “All coverages are subject to insurance policy terms and conditions." 

Response 6: In Texas, such a request is illegal, as is completing the COI as requested. Tell them that you cannot certify anything that is not found within the policies that you are providing.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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