I had an associate read my recent post on certificates of insurance and ask about the term surplus lines. My apologies for using insurance gibberish without an explanation.
Surplus lines is an insurance term that means non-preferred or special when it comes to insuring difficult to place risks. For instance, Safeco, Firemans Fund, Liberty, and Travelers are all examples of standard, preferred companies. Surplus lines markets include Lloyd’s of London, Scottsdale, and National Fire and Indemnity to name a few. Most surplus lines you’ve never heard of.
Surplus lines companies are generally very financially sound and niche driven. They normally insure to business that the standard companies won’t touch with a ten-foot pole. They can be more difficult to deal with, though and much more inflexible. If your business must be in a surplus lines company, make sure you talk to your agents about exclusions and limitations to make sure you don’t have unwanted gaps in coverage.
Be safe and be well,
Have you ever just needed someone to talk to on your insurance? Someone who is an expert? Someone who is completely unbiased? Now is your chance!
I have created a forum for the people in my community to access me any time to get answers to their most important risk management questions. This forum is through Google Groups and will be exclusive to my members only. Members can e-mail me their questions and I will answer them within several hours. If it’s urgent, let me know and I will do my best to respond within an hour. How’s that for service!
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This is so brand new that it’s not on my web site. I’m going through a re-design so it won’t be up until the new site is live. You can access it through my blog and my e-mails. Get in on this early and take advantage of my 22-plus years of experience. Save time, money, and frustration on your insurance for one very low investment. It’s a can’t miss deal!
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Be safe…
Asking for certificates of insurance may be a regular part of your business operations. If you’re a contractor, you may get over a hundred requests during the course of the year. If you are a retail operation, you may do none. Regardless of the number of times you need to ask your agent to provide certificates of insurance, there are some key points you need to know…
- Certificates of Insurance provide NO COVERAGE. They are solely for informational purposes. Too often, I fear business owners believe they act like a binder. They don’t. They merely advise and/or confirm limits of coverage to another party that needs to know.
- Recipients of certificates rarely know what they really do. I work with a coaches association that routinely is asked to provide certificates. The recipients will normally think that this acts as a binder. As mentioned above, it’s sole purpose is to confirm coverage for a specific date and time. That’s it.
- Additional insureds may be included on the certificate. This confirms coverage for this policy to the recipient party. It doesn’t give them any more rights under the policy.
- If you are in a surplus market due to your operations, you might find it more time consuming to get certificates. A standard carrier gives authority to its agents to issue certificates. For non-standard or surplus lines insurers, they must be the ones to distribute them. This can take some time, so if this is you, make sure you are working in advance.
Certificates of insurance have become a very standard part of the insurance process. If you only get one thing out of this post, it should be this - Certificates of Insurance provide no coverage and aren’t a binder. They simply exist to provide insurance information to a third-party that is limited to the date and time of that certificate. Don’t ever count on it being a fail-safe for a claim.
Be safe!
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Be safe.