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Could You Spot a Fake Certificate of Insurance

Fraud and misrepresentation are not strangers to the insurance industry. Though there are thousands of people working ethically, corruption still exists. Why are the moral complexities of insurance companies important to you, the owner of a general contracting company?

The reason is simple.

First, as a general contractor, you are often looking for subcontractors to collaborate with. Just as your client will request a certificate of insurance (COI) from you, it is essential that any subcontractors hired by your company provide their own certificate of insurance.

Though not incredibly common, fake certificates of insurance have been known to circulate around the construction industry; knowing how to spot a fake COI can save you thousands of dollars and legal repercussions in the long run, should an accident happen. In the unfortunate event that a subcontractor is successfully hired with a counterfeit COI, works haphazardly, and an accident occurs you will likely be held liable for costs and damages.

Why Get a Fake Certificate of Insurance?

A subcontractor may get a fake COI for many reasons, however most of the time it is due to financial reasons. They could be in a difficult spot with money and cannot renew their policy, or they might be looking to save money by avoiding purchasing a policy needed to bid on a project.

How do they obtain a fake certificate of insurance?

Usually through searching the Internet. There are other options to find an insurance certificate, though there are a surprising amount of highly accessible ones through a simple online search.

Another option? Doctoring an old certificate. This is usually done to avoid renewing an old policy. Often, a subcontractor will doctor an old certificate of insurance for a contractor who they have previously worked for when they cannot afford to renew the necessary policies.

Doctoring old certificates of insurance is sometimes done by new business owners. When starting a business, affording new insurance policies might not be financially prioritized. A fake certificate of insurance can be produced with minor photo editing skills.

It does not matter how honest or truthful an individual is, counterfeiting a certificate of insurance might be an appealing option that could be incredibly costly if not caught.

How to Spot a Counterfeit COI

Do you and your certificate of insurance administrator know what to look for in a fake COI? In 2014, SEMI posted a useful checklist that is still relevant today for industries working with certificates of insurance. Protect your business from subcontractors with fake certificates with these few simple tips.

Confirm the COI is Produced by Acord 25

A trustworthy contracting business will use a reputable insurance agency which displays proof of insurance with an Acord 25 form. Check the bottom left-hand corner of the document; it is a red flag if “Acord 25” is not written on the form.

Another great tip is to check the document for a box that says, “clear all”. If you find this box, there is a high probability that the certificate of insurance was found online and made on a PDF reader.

Verify the Legitimacy of the Insurance Company

The name of an insurance company should be displayed on the top right side of a certificate of insurance. Contact your insurance agency to confirm that the form was distributed from an existing insurance company if you have any doubts. If you still have worries, visit the AM Best Company’s website to look up the insurance company in question; you can use the “ratings and analysis” section to investigate the insurance company listed.

It should be a massive warning if the insurance company is unsearchable by either your insurance agency or the online registry. If this occurs, call the insurance company listed on the document and ask specific questions about the policy; if they are unable to answer your questions, then you should look for another subcontractor.

Ensure Consistency Throughout the Certificate

Mismatching fonts or handwriting are a clear signs of a fake certificate of insurance, and checking for consistency only requires an observant eye. Examine the policy’s effective and expiration dates as well as the description of operations section; if something isn’t aligned—for example, one row of text is higher than the others—the document was likely edited.

Additionally, make sure that any handwriting on the form is an exact match and that the same font style is used throughout the COI. It can be hard to get everything perfect when editing a counterfeit document, so be observant. If you notice any discrepancies, further investigate the matter.

Act Fast

Certificates of insurance should be checked as soon as they are submitted by your subcontractor; choosing to wait only increases the likelihood of an uncovered claim occurring. If you suspect a fake certificate of insurance, do not wait to verify its legitimacy.

It is important to check every certificate of insurance that comes through your office. You could be given a fake certificate of insurance even if you have worked with the same subcontractor in the past.

Protect Your Business with the Right Coverage

Insurance serves a vital role in the protection of your business. It is essential to prevent your business from financial harm with the correct insurance coverage for all types of risks you could be exposed to. If you think that your liability policy is too small for your business or the subcontractors that you work with, it is time to talk to an insurance agent.
If you are not sure if the insurance coverage you have is sufficient, contact us to get a free quote. We can make sure you have the appropriate insurance coverage based on your business needs. We will look at the policies that suit you best and get you a new certificate so you can prove you are fully covered and ready to take on new projects.

Avatar for John Brown
Written by: John Brown
John has more than 25 years of experience in the insurance industry. He grew from a star insurance producer to owning one of the largest agencies in the country; he's a reference regarding contractor's insurance, commercial insurance, and builders' risk insurance.