In many cases, when lenders make loans secured by real estate, they’ll want to ensure that the borrower has property insurance and a sufficient level of it to pay off the loan in the case of damages.
These lenders rely on getting proper proof of coverage through documents called certificates of insurance (COIs) for a few key reasons. The first is that their contracts usually require them to confirm property insurance and a COI is the standard way to do so. The second is because it would be impractical, if not impossible, for them to read through dense policy documentation to everyone they loan out to, and COIs summarize a policy’s major details onto a single page.
In this blog, we’ll discuss the creator and disseminator of COI forms, ACORD, and we’ll specifically dive into the ACORD 28 certificate of property insurance in the latest addition to our Certificates of Insurance 101 blog series.
Is ACORD an Insurance Provider?
The Association for Cooperative Operations Research and Development, or ACORD, is an important organization in the insurance and related financial industries. However, let’s get one thing straight. ACORD is not actually an insurance provider.
If ACORD isn’t an insurance provider—what is it? They’re a nonprofit organization created in the 1970s that formed due to a seeming lack of organization and standardization across insurers. By standardizing around a few key processes and documents, they have become the global standards-setting body for the insurance industry, helping many agencies worldwide better communicate and collaborate with one another and their clients. For example, today, the most accepted method of providing proof of a general liability policy is not just any old certificate of insurance but specifically the ACORD 25 form.
Why Do Insurance Companies Use ACORD Forms?
There are many reasons that ACORD forms have become the standard for insurance practitioners around the world, and especially in America, for the last few decades.
The biggest one is that standardization is the primary reason that ACORD was formed. A group of industry professionals noticed the lack of clarity in insurance forms and processes and aimed to create an organization that would help. And so, ACORD was born.
With the network effects (when something gains value when more people join in on it) that come with using ACORD forms, more and more insurance providers quickly switched to the clearer system. That’s why it is now an industry precedent.
Another reason that so many insurance companies use ACORD forms is that it helps them maintain their compliance. Because ACORD certificates were created with adhering to industry guidelines and regulatory requirements in mind, and they make updates when regulations change, they’re helpful in building confidence for any company’s compliance efforts.
What Is an ACORD Certificate of Property Insurance?
The Certificate of Property Insurance, also known as the ACORD 28, is a popularly used in COIs for real estate. It is used to demonstrate the existence of commercial property insurance coverage, acting as evidence of coverages granted to a property used in the conduct of business.
We get questions about ACORD 28 vs ACORD 27 often, so let’s take a moment to clarify. In contrast to ACORD 27, which pertains to personal property coverage, ACORD 28 is intended especially for companies or organizations that need to provide proof that their commercial properties are insured.
The ACORD 28 form is frequently required for leases, commercial real estate transactions, and other business agreements pertaining to commercial property.
What Is an ACORD 28 PDF?
You might be tempted to search around online for a fillable ACORD 28 form. We’ll warn you against it.
An ACORD PDF is an example of an ACORD form made digitally accessible in a portable document format. While it’s completely okay to peruse available online ACORD 28 PDF examples such as this one (especially when coming straight from the ACORD website), an attempt to fill out a business COI without the insurance provider of the policy is considered invalid and illegal.
How to Fill Out ACORD 28?
To fill out an ACORD 28 form, you’ll first have to contact the insurer currently granting you coverage, as they are the only ones able to certify that you have an active policy.
You will provide them with any necessary details, such as the requirements that your requesting party (who will become the certificate holder once the COI is generated) has of you. These can include things like additional insured endorsements, minimum/maximum coverage limits, waivers of subrogation, and more.
From there, your insurance broker or agent will generate the certificate, providing it to you to give to the requesting party as evidence of your commercial property insurance.
myCOI: The COI Management Partner For You
COIs can be a confusing subject for those new to the insurance space. If you’re feeling lost or behind, or worse, are nervous that you and your vendors aren’t maintaining proper compliance, call us today to learn how we can be the partner you’ve been missing.