The standard ACORD 25 certificate of insurance is far from a modern document. With a simple grid template, consistent fields and little in the way of a watermark or credentialing practice, it’s not surprising that so many contractors try their hand at creating their own. It may surprise you, however, how many are successful. In this article, we’ll go over why the number of fraudulent COIs has shot up in recent years, how fake COIs are created, and how to know whether a certificate of insurance is real or fraudulent.
Why Fake a Certificate of Insurance?
The simple fact is that creating a fake a certificate of insurance is often significantly easier (not to mention cheaper) than obtaining a real one. If you google “COI template,” you’ll find many easily adjustable options to choose from. The dramatic increase in homemade COIs is partly due to the fact that more of the workforce has the digital literacy to find and edit these images.
A second key factor is the increase in online insurance quoting. As little as three years ago, the first step you would take to get business insurance was likely to google “business insurance broker,” or call one you were familiar with. Now, more common search terms include “online insurance quote,” “business insurance online,” and “cheap certificate of insurance,” all of which will return images of a certificate of insurance template.
A third factor is the rise in short-term, on-demand, or contract jobs, for which the cost of insurance can often outweigh the potential profit. This phenomenon is referred to as “unbalanced contract economics.” If you’re expected to pay $500 for an 12-month insurance policy, and your 3 week contract only promises $1,200 in profit, you might start to think about other options.
How Fraudulent COIs are Created
There are three main ways Certificates of insurance are fabricated. Either an entirely new one is created using a template image, an old one is updated with new dates, or the business name is edited on someone else’s COI. Any of these things can be done with the free preview and editing tools available on most computers, so it’s important to know what to look for.
What to Look For:
Some fake certificates of insurance will be easy to spot. A surprising number of folks will use varying fonts, colors, or obvious redacting, which is a clear indicator that the form wasn’t professionally issued. If it’s not immediately clear, check for these key features:
The vast majority of reputable business insurance companies use the ACORD 25 form. This is identifiable by the (black) logo in the top left corner, as well as the text at the bottom.
Make sure the certificate of insurance lists a legitimate company, which offers the type of insurance you’re requiring. If someone says they have a Lemonade Professional Liability policy, they likely do not. A good way to quickly verify that the company not only exists, but has a good rating, is to search the name at www.ambest.com.
Alignment & Font
Look at the effective and expiration dates. Are they in the middle of the box? Do they appear to be the same font as the policy number? If not, there’s a good chance they were edited later.
The best way to catch the more carefully created COIs is to know your layout. There are industry conventions that insurance carriers, brokers and agents are familiar with, which someone filling in their own copy would likely miss. For example:
- Most ACORD 25 forms have a section for General Liability, Workers’ Compensation, and Automobile Liability. Other coverages like Crime or Cyber Liability would only be added if the policy includes those coverages. If there’s space for those policies but no limits listed, the certificate was likely created for a different policy.
- Look for zeros. While the COI will list the coverages mentioned above, the limits will simply be blank. If the limits are listed as 0, N/A or None, it’s likely that a non-professional filled in the form.
The Insured Box
The Insured box should list the Named Insured’s Business Name and address. If you see a person’s name (unless their business name is their name), they may have filled it in themselves. This becomes an even bigger issue, because the name in the Named Insured box has to correlate directly with the business name referenced in a claim. If a claim is filed against Bob’s Burgers, but the insurance policy lists “Robert Belcher,” the coverage may not apply. Read How to Read a COI Like a Pro to learn more.
This is the contact at the insurance company who created the document (i.e. the agent/broker/advisor). A good first step is to check that the contractor hasn’t listed their own name here (a common mistake on fraudulent COIs). The second step is to check that the name matches the signature at the bottom, and that the email domain matches the Producer. If you’re uneasy about the certificate, you can also search this person on LinkedIn to make sure that they A) exist, and B) work at for the Producer. If all else fails, you can always reach out to them directly to verify that the policy is valid as well.
Another commonly missed section, INSR LTR stands for Insurer Letter, which references the “Insurers Affording Coverage.” These specify which insurance carrier is responsible for each individual policy. For example, a Certificate of Insurance produced by Bunker (the Broker) and signed by Sarah (the Agent) could have a general liability policy written by Chubb (Carrier), and a professional liability policy written by The Hartford (Carrier). Check that at least one row has an insurance carrier listed. Then, check that all coverages with limits listed have that letter in the INSR LTR column. A second red flag is a letter next to an empty coverage, which could mean it’s an old COI with coverages edited out.
Just like the Producer, you can do a quick check to make sure that each of the insurers affording coverage actually write liability insurance policies. Contractors will often list the insurance companies they’re familiar with from their home, health or auto insurance. Google “[carrier name] liability insurance” to quickly assess carriers you’re unfamiliar with.
ADDL INSD & SUBR WVD
These thin columns on the left half of the COI stand for Additional Insured and Subrogation Waived. Fortunately, like the Insurer Letter column, most contractors wouldn’t know that off-hand. They are also unlikely to know that the input is a Y rather than X. If there is an additional insured or waiver of subrogation listed in the Description of Operations box, check if that policy also has a Y in the column. Any policies without the two will be left blank. An ‘N’ in the box is another indicator that they’ve filled in the information themselves.
Note: The ADDL INSD box is referring to a Blanket Additional Insured, meaning it’s possible that they have your company listed as additional insured and the box is blank. Read Is This COI Compliant? Decoding the Key Terms that Make Up an Insurance Policy to learn more.
What to Do When You Get a Fake COI
The details in this article by no means guarantee that the COI is fake. At the end of the day, COIs are filled in by humans and can vary significantly based on human error and company standards. Likewise, a fraudulent COI can have each of these items perfectly up to code. The best thing to do if you’re unsure about a document is to reach out to the insurance contact listed in the top right.
A second popular option is to outsource COI screening. The best solutions will combine software with human expertise, to ensure that every anomaly is spotted.
Bunker’s COI screening and verification has saved our members 30 minutes per COI, and increased compliance by 40%. Our proprietary software screens every certificate of insurance, creating a digital version that can be shared and updated in real time. Then, our team of licensed insurance advisors verify that each and every certificate meets the exact contract requirements – enhancements, waivers, and all – and notifies your team when they’re compliant and ready to get to work!
Because Bunker is also a licensed digital insurance broker, we’re able to verify compliance twice as fast, and at about half the cost, of other screening tools.
Ready to say goodbye to ACORD forms for good? Reach out to firstname.lastname@example.org, or give us a call at (877) 968-9108!