Having a Certificate of Insurance is truly important, but having a valid Certificate of Insurance is the key. When you request a COI from someone don’t just take a look and call it a day, but rather check if the content is legit. Insurance is expensive and many people, even companies think it’s smart to cut out on these expenses. However, many places require customers and clients to uphold a COI, so miser companies either fake a COI or make the expired COI look valid.
If you don’t have software that can check the COI you have been presented with, fear not! There are a few key factors that you can take a look at and determine whether the COI is legit or a fake one.
1. Using the Acord 25 Form
Most insurance companies that are legit and are taken seriously use the Acord 25 form. It is a major red flag if the bottom left corner doesn’t contain the “Acord 25” label. If you would like to know more about this form read our article explaining the form here.
2. Verify the Issuer Company
If you are having doubts, you can always contact your insurance company and ask them to verify the company in question for you. First of all, it should be confirmed to you that the company does exist, and second of all that it’s a legit insurance company and not some other company that is just posing to be an insurer.
3. Check Validity Period and Sector
This should be a no-brainer however, it is important to say: go over the validity dates. Check expiration dates, validity periods, and even the operation policy. You can get presented with a COI and not have the matching operation sector. For instance, you can’t deliver with a simple car insurance. That won’t cover potential damages to a building.
4. Check for Typos and Handwriting Inconsistencies
A typo can happen to anyone, but again, professional companies check for all typos to avoid having to do any future corrections and of course look professional. Clients also request typo corrections, thus either a correction paper will be attached to certify that the typo was made and corrected or there will be no typos at all. Handwriting inconsistency is also a red flag when checking for a fake COI. If there is such inconsistency, for example, other people have signed the documents too, make sure that their position is listed below and verify if they work at the company and in the claimed position.
5. Lack of Communication
If you have further concerns about the COI you can contact the issuer company and ask them to verify the COI for you. If they are legit, they will do it for you in minutes with no problem. You can even ask for a follow-up.
6. Get Familiar with Generic Forms
If you surf the internet for COIs you will be presented with a ton of free-downloadable files that can seem like valid forms. If you see “Clear All” on your file it is very likely that the COI has been made with an application and is not legit.
7. Alignment of Data and Font
Although this may seem like a minor fact to check, it can make all the difference. Check if the data fonts match the policy number’s font, and while you’re at it check the alignment: it should be centered. If these two basic facts don’t align, there is a good chance that the COI was edited later.
8. Know the COI Layout
There is a known standard insurance layout that carriers, brokers, and agents know and use, which wouldn’t be used on a fake COI that comes from someone outside of the industry.
- Most Acord 25 forms have General Liability, Worker’s Compensation, and Automotive Liability sections. Crime and Cyber Liabilities are only added if the policy is requested to be included in the said liabilities.
- On a COI that lists the coverages, but does not apply to the current COI, the field will be left blank. If the limit is listed in any other amount, then that is a good indicator that the form was filled out by a non-professional.
9. Get Familiar with the COI Sections
- Insured Box
If the COI is for a business, then it should list the business’ name, not the owner’s name, unless the owner’s name is the business name. Make sure to confirm if the latter applies.
- Contact Information Box
The contractor should list the company name, not their own name. If a contractor’s name is listed, then that’s a good indication that the COI is not legit. The name should also match the signature. Moreover, the e-mail address should also match the name or it should be an official address like “@office”.
- INSR LTR
Stands for “Insurer Letter” and refers to “Insurer Affording Coverage”. This section specifies which insurance company is responsible for which policy. Check that at least one row has an insurance carrier listed and signed and check that all coverages and limits are checked with the corresponding letter in the INSR LTR column. If there is a letter next to an empty coverage filed, then chances are you are dealing with an old, edited COI.
- ADDL INSD & SUBR WVD
Additional Insured and Subrogation Waived columns are usually filled with a “Y” rather than an “X” or any other letter. If these columns do not apply, they will be left blank.
Checking off these points can help you verify if the content of a COI is real. However, keeping track of a COI is a tedious job. Ctrax is an autonomous COI tracker software that helps manage your COIs. The software sends out notifications of validity to avoid future potential fraudulency. If you would like to know more about how to verify a COI and how to avoid fake COIs watch our expert James DeRosa talk about it in our video: