Certificates of Insurance

1. Certificates of Insurance Presenters: Paul N. LalleyCampbell Durrant Beatty Palombo & Miller, P.C.R. Scott AgarInsurance Buyers’ Council, Inc.

2. Certificate of Insurance (COI) • Purpose is to provide evidence of insurance maintained by one party (Insured) to another party (Certificate Holder). • Evidence compliance with contract requirements. • Evidence a source of financing for indemnification obligations. • Evidence financing for the consequences of negligent acts of Certificate Holder.

3. Certificate of Insurance (COI) • “THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.”

4. Valid COI’sSupport Risk Transfer • The law says that when you hire a contractor to perform work or services, you are liable for the contractor’s action (vicarious liability). • The party creating a risk should be responsible for the consequences of that risk. • You want to transfer the risk to the contractor creating the risk and seek assurance they can finance the consequences of that risk.

5. Parties From Whom You Require COI’s • Contractors • Vendors • Users of your Facilities

6. High Risk Activities • Does the activity: • Present a high risk of injury or death to the municipality’s employees, the entity’s employees, or to the public? • Present a high risk of damage to the municipality’s buildings, grounds or equipment? • Have a record of negligently causing injury to persons or damage to property?

7. High Risk Activities • Involve heights; • Involve high energy levels; • Involve heavy materials, equipment or vehicles; • Involve chemicals or contaminants; and/or • Proximity to people and property.

8. COI Disclaimer • THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. • THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. • THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

9. COI Disclaimer • NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

10. COI Disclaimer • IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. • If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. • A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

11. What Does the COI Tell Us? • The “Insured” name and address – this should match those on the contract or agreement with contractor/vendor; • “Insurer(s) Affording Coverage”; • “Producer” – the Insured’s agent or broker; • “Type of Insurance”, “Policy Number”, “Policy Eff” (effective) and “Policy Exp” (expiration) dates and “Limits”;

12. What Does the COI Tell Us? • “AddlInsr” an x under this indicates additional insured status; • Whether General Liability coverage is on a per occurrence basis “OCCUR” (vs. “CLAIMS-MADE”); • Autos covered for Automobile Liability (Any Auto, All Owned Autos, Scheduled Autos, Hired Autos Non-Owned Autos);

13. What Does the COI Tell Us? • “Description of Operations / Locations / Vehicles” allows for description the agreement or project that necessitates the Certificate of Insurance; and • Other amendments that do not have a specific placeholder in the standard COI.

14. Require Additional Insured Endorsement • Per the Disclaimer, it’s the only way to ensure additional insured status. • The endorsement conveys rights not conveyed in the COI.

15. Review Sample COI

16. Centralized Contract Management • Identify who is authorized to sign contracts; • Describe when solicitor review of a proposed contract is required; • Designate a municipal employee who is responsible for oversight of the municipality’s contracting policy and training of your employees on the policy. • Require the use (where possible) of contracts/agreements/purchase orders developed by the municipality.

17. Audit – Loss Control Standard • Has the entity identified all of their contractors? • Does the entity have written contracts with all of the contractors? • Have all of the contracts been reviewed by legal counsel? • If “No”, does the entity have centralized contract management (one person)?

18. Audit – Loss Control Standard • Does the entity’s standard and non-standard contract language require all contractors to include the entity as an “Additional Insured” on their General Liability policy? • Does the entity ensure, by review of a contractor’s Certificate of Insurance (COI), that each contractor has the required Worker’s Compensation coverage?

19. Audit – Loss Control Standard • Does the entity have a written procedure for requiring contractors to provide appropriate COI and for appropriate review of these submissions prior to issuing a contract? • Is the entity following the written procedure for reviewing the COI submissions? (Who?)

20. Audit – Loss Control Standard • Does the procedure include a mechanism for tracking COI expiration dates and contract completion dates? • Is there a process for ensuring all COI’sfor active contracts are current? • Are all COI’sreviewed annually by your insurance representative or PennPRIME?

21. Contract Management 101 • Contractual risk management is a means of identifying the risks to a municipality posed by a contract and including terms in a written agreement that ensure that the contracting party has adequately protected the municipality against the threat of financial loss.

22. Contract Management 101 • Contractual risk management seeks to reduce the risk of financial consequences to the municipality that arise from the negligent acts of others while they are performing work and services on your behalf, or when they are using your facilities or other property.

23. Questions and Answers

24. Certificates of Insurance Presenters: Paul N. LalleyCampbell Durrant Beatty Palombo & Miller, P.C.R. Scott AgarInsurance Buyers’ Council, Inc.