Determining COI Limits When a Claim Has Been Submitted

An agent is issuing a new certificate of insurance with policy limits of $1 million/$2 million. The agent also knows of a $500,000 claim.

Q: What policy limits should I show on the COI?

Response 1: You should show the policy limit that appears in the policy.

Response 2: List the limits that appear on the policy declarations page.

Response 3: ACORD says you’re supposed to show the limits from the dec page. The COI contains a disclaimer stating that the limits shown may be reduced by paid claims.

However, if the insured has signed a contract that requires limits higher than what the insured has, you might need to get the limits increased or notify the insured they are not in compliance with the contract.

Response 4: Whatever the COI demands. You’re not authorized to divulge material matters that fall outside your realm of responsibility. You don’t know whether this is only a reserve, or if other negotiations are in the works between relevant parties privy to legal proceedings.

Response 5: Custom and practice is that COIs show the limits in the policy, without regard to reserves or claims paid.

Response 6: The policy limits on the COI should be identical to the limits purchased by the insured, and should also reflect the ways in which the limits apply. Claims aren’t settlements, and possibly eroding limits are not really in your purview as the agent. See the Instructions for Completing the ACORD Certificate of Liability Insurance for additional details.

Response 7: A claim does not change policy limits. If it’s a burning limits policy, show available limits based on what has been paid. If not, use the limit stated on the dec page.

Response 8: The policy is written at $1 million/$2 million, so that’s what the COI should show. The COI must match what the policy lists on the dec page, not what portion of limits remain, if any.

Response 9: Show the limit on the policy. That’s your only obligation.

Response 10: The COI is a snapshot of the policy. It should list the limits exactly as they appear on the dec page.

Response 11: If I remember correctly, one of the disclaimers on the COI states that limits may be reduced by paid claims. I assume the $500,000 has not been paid and you do not know for certain that it will be paid, so don’t mention it on the COI.

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