If you’re running a business today, there are many steps you need to take to ensure its protection. Too many cases exist where, if not properly safeguarded with coverage such as liability insurance, your business could be struck with claims or held responsible for damages even when not the at-fault party.
If you’re new around here, we’re myCOI, a premier COI management software platform that combines industry expertise and customer service to understand our client’s needs and deliver the technology and services, such as certificate of insurance tracking, to address them.
This blog is a part of our ongoing Certificates of Insurance 101 series, where we’re covering important industry information about insurance verification and management, which can all be found on our blog. Today, we’re discussing ACORD insurance certificates, what they are, common examples, and why so many insurers around the world use them today.
What Is ACORD?
ACORD, which stands for the Association for Cooperative Operations Research and Development, is a nonprofit organization established by insurance carriers and agents in the 1970s to improve the efficiency and effectiveness of data exchange within the insurance industry. Insurance transactions used to be primarily paper-based and could vary from insurer to insurer, which led to many inefficiencies.
Around the 1990s, ACORD standards gained popularity and more widespread adoption, helping to standardize and automate processes within the insurance industry. They now work with insurance organizations worldwide and help establish global data standards. Today, they still aim to clarify and standardize things industry-wide while also incorporating newer trends and technologies as necessary.
Is ACORD an Insurance Provider?
A question we receive a lot is regarding whether or not ACORD is an insurance provider. While ACORD is a significant figure in the insurance community that helps out many insurance providers, it’s not actually one itself. Instead of providing insurance coverage, ACORD helps those who do, as well as policyholders and clients, by crafting and spreading industry-wide best practices.
What is ACORD in Reference to COIs?
The Association for Cooperative Operations Research and Development, or ACORD, is an international nonprofit organization formed by a group of companies in the 1970s who believed that standardized insurance certificates were necessary for the industry.
Before their formation, lots of confusion existed around COIs, exacerbated by the fact that pretty much every insurer had its own set of policy forms for people to deal with. Thus, in order to combat confusion associated with COI collection and verification, ACORD began developing standard forms.
To clarify, while not actually an insurance agency itself, ACORD is an authoritative group in the space that issues standardized insurance forms that both follow and define industry guidelines. Though they’re not required for insurers to use, they have become an industry standard. Their forms have simplified the COI process for policyholders, provided increased standardization and clarity to insurers, and helped companies more easily and comprehensively verify the coverage of hired third parties.
Read on to learn more about ACORD forms and why they’re still the standard today.
What Is an ACORD Insurance Certificate?
ACORD forms are standardized documents used within the insurance space to facilitate communication, documentation, and information exchange among various stakeholders. The most prominent of the ACORD form types is the ACORD insurance certificate, which ensures that important policy details are consistently and effectively shared among insurance professionals, policyholders, certificate holders, regulatory bodies, etc. However, ACORD develops various other forms for different purposes within the insurance industry. Some of the purposes that ACORD forms serve include:
- Evidence of insurance: ACORD insurance certificates, such as the ACORD 25 Certificate of Liability Insurance, provide proof of insurance coverage. They summarize key policy details that demonstrate a party’s insurance protection to third parties.
- Information Exchange: ACORD forms allow insurance agents, brokers, carriers, insured parties, and other stakeholders to share accurate, standardized information about insurance policies.
- Policy Applications: ACORD forms help streamline the process of applying for insurance coverage by gathering essential information required to underwrite and issue policies.
- Endorsements and Changes: When policyholders need to make changes to their coverage, ACORD forms provide a standardized way to document and communicate these changes to their insurers.
- Contractual Agreements: ACORD forms are often required in contracts (especially in injury-prone industries such as construction) to ensure that parties have the necessary insurance coverage for the activities outlined in the contract.
- Regulatory Compliance: Many ACORD insurance certificates are designed to align with industry regulations and standards in mind and update them when needed, making them valuable tools for maintaining regulatory compliance.
- Verification of Coverage: Parties requesting services or entering into agreements with insured parties often require verification of insurance coverage. ACORD COIs provide a standardized way to meet this requirement.
- Claims Reporting: ACORD forms make it easier to report insurance claims by housing many of the details needed to initiate the claims process.
- Claims Settlement: ACORD forms can also assist in documenting and sharing information during the claims settlement process, ensuring transparency and accuracy.
- Renewals and Cancellations: ACORD forms help insurance companies communicate policy renewals and cancellations to insured parties and the people they work with.
- Underwriting: Insurance underwriters use ACORD forms to gather information necessary for assessing risk and determining appropriate premium rates.
- Industry Efficiency: Ultimately, ACORD forms contribute to the efficiency of the insurance industry by reducing paperwork, streamlining communication, and minimizing errors.
What Are the Most Used ACORD Forms?
As we mentioned above, insurance certificates, also known as insurance certificates, certificates of insurance, or COIs, are the most commonly used ACORD forms. These are important documents because they provide evidence of coverage of someone carrying a policy for a third party’s review, and they provide all of the pertinent information in a single-page format. Let’s answer some frequently asked questions regarding a few of the key most used ACORD forms.
What Is ACORD 23 Used for?
The ACORD 23 form is also known as the Vehicle or Equipment Certificate of Insurance or Automobile Certificate of Insurance. Generally, it covers physical damage and/or liability insurance coverage to lessors or loss payers of leased vehicles. ACORD 23 COIs are often required by anyone who funds or owns a vehicle or piece of equipment to provide information regarding insurance in the event of damage. In the case of an accident, the other party should look over this COI and take note of the details for evidence of their insurance. If you want to get a better idea of what this form actually looks like, here’s an example of a blank ACORD 23 form.
What Is an ACORD 25 Certificate?
The ACORD 25 certificate is the most popular and commonly used ACORD form. It’s also known as a Certificate of Liability Insurance, and its purpose is to verify the existence of insurance coverage, policy details, and limits to third parties who require this information. It’s a standardized way of sharing essential insurance information and serves as evidence of liability coverage, such as general liability, workers’ compensation, or professional liability. Find out more about how to verify insurance coverage.
What Is ACORD Liability Insurance?
As explained above, the ACORD Certificate of Liability Insurance, also known as the ACORD 25, will act as evidence of general liability insurance. This form, like other COIs, will include details about the insured, the certificate holder (the party requesting the certificate), policy information, coverage types, limits, and effective dates. It ultimately helps verify the existence of insurance coverage without providing the full terms of the policy. ACORD 25 COIs are often used in projects like construction jobs.
What Is ACORD 27 Insurance?
Another common ACORD form is the ACORD 27: Evidence of Property Insurance. This certificate serves to validate the existence of property insurance coverage on personal property, assets, or valued belongings. ACORD 27 COIs are often used in scenarios related to property buying, renting, and loaning, such as when dealing with loss payees for mortgages or loans.
How To Get an ACORD Insurance Certificate
Now that you understand the importance of ACORD insurance certificates, let’s walk through the process of obtaining one.
In order to acquire a COI that provides evidence of a policyholder’s insurance coverage, the policyholder themself must obtain it. This typically means that they use an online portal from their insurer to request and download the insurance certificate or book an appointment with their insurer and request the document in person. The named insured will provide a few details, and the insurance agency will generate the ACORD certificate, either delivering it back to them or straight to you, the requester or certificate holder.
As a business owner, you have the right to request an ACORD insurance certificate from prospective contractors, vendors, and other third parties to confirm that they are duly insured before beginning work with them. You can even weigh multiple COIs against each other to compare different bidders’ insurance coverage to how well they meet your project’s specifications.
It is important to note here that while technically anyone can go online and download a PDF of an ACORD insurance certificate form, you should do so for educational purposes only. ACORD insurance certificate samples are widely available online, but you should really only access the forms to familiarize yourself with them (since the sole party capable of actually issuing a COI is the insurer of the policyholder in question).
Which ACORD Is Considered to Be the Standard Certificate of Insurance for the Industry?
There are hundreds of different ACORD forms (over 850, in fact), each serving its own unique purpose. However, the king of COIs in many practitioners’ minds is the ever-common Certificate of Liability Insurance, also known as the ACORD 25. This is because it’s a straightforward business certificate of insurance that is commonly used in insurance verification, and liability coverage is a popular policy to request proof of. After all, it’s incredibly important to know if those you’re working with have coverage for property damage and bodily injury—or if you might instead be held liable for those costs.
Where Can I Download ACORD Forms?
People often wonder about blank, free, or fillable ACORD certificates of insurance. While there are accessible digital documents that can be helpful in learning more about ACORD insurance certificates online, attempting to fill out a COI on your own can get you into a lot of trouble. Only the insurer that is covering a policyholder can officially fill out and generate an ACORD form COI for that given policy.
If you’re wondering how to get an ACORD insurance certificate, you can either work with your insurance provider to issue a certificate for a policy of your own or send a COI request to the party you need verification from to work with their insurance provider to do so. It is also possible to get an ACORD insurance certificate online if your insurance provider has that capability.
Why Do Insurance Companies Use ACORD Forms?
We’ve talked a lot in this blog about the significance of ACORD and the global industry-wide standardization that we see so much more now due to their important documentation work. There are numerous reasons why insurance companies around the world utilize ACORD insurance certificates for their insurance verification efforts. Here are three:
- It’s simpler. Instead of all having to create our own forms, industry-wide, we can rally behind one smart and dignified creator.
- It’s more standardized. Individuals and businesses would receive the same kind of COI for the same kind of policy even if they switched insurers, making it easier for everyone involved to streamline the understanding and processing of these documents.
- It’s catered to compliance. ACORD keeps up with state laws and regulations and does the due diligence of ensuring compliance in its forms so that you don’t have to. Just make sure you’re using the most up-to-date version of that ACORD form, and you should easily maintain compliance.
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