Blog Question: Schedule v Certificate of Currency v Certificate of Insurance
I received the following question from someone new to general insurance.
- Certificate of insurance
- Certificate of currency
What is the effective difference (if any) between these terms?
Oliver [surname and email provided]
I could write a book on all that is going through my mind in preparing to reply to your question.
A Certificate of Currency is confirmation that a policy is in existence on the date it is issued (or should be). It should be issued by the insurer but some brokers issue them to save time but I feel it opens them up to a potential Professional Indemnity claim if they have not double checked with the insurer that the policy has not been endorsed or cancelled and or if they do not get all the details correct.
They are of limited value for I have seen some dodgy sub-contractors arrange for a certificate of currency to win a job and the day after it is issued they cancel the policy, obtain a refund and work without insurance. The person, ie the principal builder or developer who relies on the document finds that the insurance is not in force at the time of a loss and the sub-contractor is a person of straw. This as you would know is someone with no assets and it is simply throwing good money after bad to chase them.
The above is just one example of the issues that I have come across but my message is that they are of limited value.
A Schedule is a document which attaches to and forms part of the contract of insurance. It sets out the name of the insured, the period of insurance, what sections of the policy are insured, sums insured, and a number of other points including any modifications to the base policy wording. I know you have a copy of my ISR book (the green book) in your office and I go through each section of the Schedule on that industry wide policy (Australia) in detail in Chapter 2 of Volume 1.
With the Schedule, if there is a discrepancy between the base policy wording and the policy schedule, then under general insurance law the Schedule takes precedent on the basis that a typical policy is not designed for every possible contingency and that this base can be modified by mutual agreement so that the intention of the parties is documented. This is done by way of the policy Schedule and or endorsements to the policy wording.
Now turning to a Certificate of Insurance. This can be used in a couple of ways. Some insurers, for example NRMA in their Private Motor Vehicle Policy, or at least the last one I looked at, use the term Certificate of Insurance rather than Schedule. For all intents and purposes they are the same thing in this situation.
I have also seen a Certificate of Insurance used where the broker has not forwarded out the Schedule from the Insurer but have produced one of their own and called that a Certificate of Insurance. Here there can be a difference, as I have seen several times particularly at renewal where say the agreed value of a car has changed on the insurer’s paper work (Schedule or Certificate of Insurance) and the one issued by the broker who just copied last years changing the period of insurance but failing to pick up the change in Agreed Value. In this sort of case, the insurer meets their obligation and the broker may well be responsible for the difference. Each case has to be looked at on its merits but I have included this to highlight the risk of a broker issuing their own version and making a mistake upon which the Insured or a third party have relied.
I hope this all makes sense but by all means let me know if you require further clarification.