Proving that someone has the insurance coverage in place that they say they do is imperative in modern-day business partnerships. The most common way to do so is through certificates of insurance.
We’ve talked a lot in our blogs about certificates of insurance or succinct documents summarizing crucial information about an insurance policy (most namely, that it is active). However, we haven’t always mentioned that COIs typically come from one important source: ACORD.
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.
Why Do Insurance Companies Use ACORD Forms?
ACORD certificates of insurance are the most widely accepted COI documents, and nearly 90% of insurance agents utilize them. Some common ACORD forms that insurance companies utilize include the standard general liability certificate of insurance (ACORD 25), evidence of property insurance (ACORD 27), and an insurance binder (ACORD 75), to name a few.
Why are ACORD forms so popular with insurance companies? A few reasons include standardization, efficiently, clarity, and compliance.
- Standardization. ACORD forms provide a standardized format for presenting pertinent insurance information. This consistency allows insurance companies to easily understand and process data from various sources, such as from policyholders, agents, and other entities involved in the insurance process.
- Efficiency. By using standardized ACORD forms, insurance companies reduce the time and effort it takes to collect and process information. The forms are designed to accurately capture essential details, allowing for more efficient data entry.
- Clarity. ACORD forms are designed to be clear and specific, be sure to include all necessary information. This reduces the chances of misunderstandings, errors, or omissions when exchanging data between parties.
- Compliance. Keeping up with industry regulations and requirements can be tough, but ACORD is watchful of changes that states make to their insurance rules and reflects them in their forms. As long as you’re using the most recent ACORD forms, you should be confident that your compliance is highlighted accurately.
- Industry collaboration. As we mentioned, there was previously lots of confusion surrounding COIs due to the variance of forms available and the general lack of standardization. ACORD forms serve as a common language between insurers, facilitating better communication and collaboration within the industry. With standardized ACORD forms, insurers, agents, brokers, and other stakeholders can easily share information with one another, making for easier and more efficient business dealings.
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).
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