How to Spot a Fake Certificate of Insurance: 8 Things to Look For

Businesses must carry insurance to cover them to safeguard against disaster. Unfortunately, many companies are underinsured or do not carry any at all. 

Roughly 40% of businesses do not have insurance. Without insurance, they have no way to cover their liabilities if something happens. That impacts everyone with whom they do business. 

Since no one wants to work with a company that does not have insurance, some business owners will create a fake certificate of insurance (COI). Any business can pass off a fake COI, even those subcontractors who look honest. Here are some things to look for regarding a company's COI and how to spot the fake ones.

Information That Will Be on a COI

This one-page document will summarize an organization’s business insurance coverage. It should include a rundown of the various types of insurance that the business has and coverage terms. Information that should be on the form includes:

8 Things to Look for to Help You Spot a Fake Certificate of Insurance

If you Google the term "COI template," you will find images that a person can print out to make fraudulent certificates. However, forging COIs is insurance fraud and is a felony under federal, state, and local statutes. Somehow, this does not deter people from creating fake COIs. 

One way to avoid receiving a fake certificate from a business or subcontractor is to ask them to have their insurance company send one directly to you. It is the only way to guarantee that their COI is authentic and up to date.

If you do receive a COI from the businesses or subcontractors, there are still ways to ensure it is authentic. Some will be difficult to spot, while others will be more obvious. Here are eight things to look for that will help you spot a fraudulent COI.

1. Acord 25 Form

The Association for Cooperative Operations Research and Development (ACORD) is an organization made up of a group of companies that believed that standardized forms were necessary for the insurance industry. The non-profit began creating these standardized forms known as the ACORD form.

The most common form is the ACORD 25, which provides proof of insurance and ensures authenticity. Most reliable insurance agencies utilize these forms and are easy to identify.

2. Named Insurance Company  

You should verify that the name of the insurance company appears on the form and that it is a legitimate insurance company. A quick Google search will tell you whether there is a business listing for that company. 

AM Best is another resource that can help you query the legitimacy of an insurance company. You can also verify the rating of the insurance provider.

3. Layout 

It's good to familiarize yourself with what a COI should look like so that you can spot a poorly made fake certificate. Even carefully created fraudulent COIs can have blatant layout issues. 

Part of knowing the layout means knowing what areas should be left blank. For instance, the COI should list the coverage amounts. If there is no coverage, the spot will be left blank. 

If you see a "0" in the field, you know that a professional did not fill out the form. "N/A" or "None" should not be in that field either.

4. Font and Alignment

Changing the effective date and expiration is one of the ways people will forge a COI. They will take an old form and make it look as though it is still valid. 

Check the font and alignment of these dates. They should have the same font as the policy number, and they should be in the center of the box.

5. Contact Info 

Here is where you can locate the information about the insurance company that created the document. Common mistakes fraudsters make is inputting their business contact information because they are unaware of what should be in this field. 

Check to ensure that all names and contact information for the insurance company match. Use this information to contact the insurance company and then verify that the form of communication does, in fact, belong to the insurance company.

For instance, a contractor may put the number of a business partner as the "issuer." When you call to verify, they state the policy is valid when it is not. You can then look that number up in an online business phone directory to ensure it does belong to the insurance company and not a private citizen.

6. The “Insured” Box

This field should contain the names of the company covered under the policy. It will also include the contact information for the business and the information of the people within the organization the insurance policy covers. 

Another common form of COI forgery is to add names to this field of people who work for the company but whom the policy does not cover. It may be the most difficult section to detect fraudulent entries. Check the font and alignment closely.

7. INSR LTR Boxes

This acronym stands for "insurance letter." It specifies which carrier is responsible for covering which type of incident. For instance, the insured may have a general liability insurance policy from a different insurance company that carries their professional liability policy. 

There should be a mark indicating that the issuer included an insurance letter with the rest of the documentation. If a mark is in the INSR LTR column without coverage listed, or a company name is in the field without a mark in the insurance letter column, you are probably viewing an old COI that someone edited.

8. ADDL INSD and SUBR WVD Boxes 

These two fields stand for "Additional Insured" and "Subrogation Waived." Most contractors will not know what these fields mean and what should be in these boxes. 

You should see a "Y" if these apply to the policy and should be blank if they do not. If you see an "X" to an "N," an insurance professional did not fill out this form.

Who is Liable for Damage with a Fake COI?

The company deemed to be at fault for the incident is liable for damages. However, if they don't have insurance, you cannot claim a non-existent policy.

If you discover that someone has given you a fake COI, you probably figured that out because you attempted to make a claim against that insurance. That is when you found out the policy was invalid. 

Don't worry as your insurance will most likely cover the claim. You will then have to take the responsible party to small claims court to recoup your financial losses (like increased premiums for making a claim).

Implement a COI Tracking System

You must protect your organization from fraudulent subcontractors who will try to pass off a fake COI as an authentic one. You will need a cloud-based solution to help you manage the COI you obtain from another company. It is the best way to protect your business.

At C2COI, our risk-mitigating software solution will help you avoid fake COIs. Our COI tracking system provides an easy-to-use platform that automates the COI communications process.

Your business has all the tools needed to manage COIs for every business partner you work with and ensures that your business avoids fraud, uninsured contractors, and costly litigation.