Five things you probably didn't know about ACORD and Certificates of Insurance

We take the ACORD form for granted, we see hundreds every day, but many people find the whole certificate of insurance process confusing. Here's a few questions we get asked all the time:

What does "ACORD" stand for?

"ACORD" is an acronym for Association for Cooperative Operations Research and Development. It is a global nonprofit organization which serves the insurance industry in the creation and filing of standardized forms.

How are these forms created?

ACORD facilitates an open standards development process. Any interested party - not just ACORD members - may propose a change or enhancement to the ACORD Standards. These proposals are known as maintenance requests (MRs) and if approved are presented to the appropriate committees for review and vote.

What is the difference between a certificate and a policy?

A Certificate of Insurance is NOT an insurance policy, and does not serve to provide, endorse, amend, extend or alter in any way the terms of an insurance policy. Only an endorsement, rider or amendment to the policy can effect changes in coverage. Reference to a contract between the client and a third-party on a certificate does not provide coverage.

I'm getting asked to provide an ACORD certificate for property. Is that the same thing as the other one?

No. The ACORD 27 and 28 forms are certificates of insurance designed for the delivery to parties that have a financial interest in the property covered by the policy listed on each. The parties are typically lending institutions and the lending community prefers the title "Evidence of…" as contrasted with "Certificate of…" Regardless of the "Evidence" reference in the title, these forms are certificates of insurance, and as stated in the forms, and as required by regulation, are issued as a matter of information only.

Why are there separate certificates for property insurance and liability insurance?

Typically, a property insurance policy obligates the insurer to notify the mortgage holder in the event of policy cancellation. A typical liability insurance policy obligates an insurer to notify only the first named insured and no one else of policy cancellation, unless the policy is endorsed to provide notice to another party. For this reason, ACORD working groups recommend publishing separate certificates.

Please note that this information is not intended to serve as legal advice and is only general information not directed to any particular set of facts.