ACORD 25 vs ACORD 27: Key Differences in Certificate of Insurance Forms

Understanding the differences between ACORD 25 and ACORD 27 forms is crucial for insurance professionals, risk managers, and compliance officers. These standardized certificate of insurance forms serve distinct purposes in the insurance documentation process, and knowing when to use each can streamline your certificate management and ensure proper coverage verification. This comprehensive comparison breaks down the key differences between ACORD 25 vs ACORD 27 forms, helping you make informed decisions about which certificate type meets your specific insurance compliance needs.

What is an ACORD 25 Certificate of Insurance?

The ACORD 25 form, officially titled "Certificate of Liability Insurance," is the most commonly used certificate of insurance form in the United States. This standardized document provides evidence of general liability, automobile liability, umbrella/excess liability, and workers' compensation insurance coverage. Insurance agents and brokers issue ACORD 25 certificates to verify that a business or individual maintains specific types of insurance coverage with particular limits.

The ACORD 25 certificate includes critical information such as:

• Policyholder's name and contact information
• Insurance companies providing coverage
• Policy numbers and effective dates
• Types of coverage (general liability, auto liability, etc.)
• Coverage limits for each policy type
• Certificate holder information
• Additional insured status (when applicable)

Common Uses of ACORD 25

The ACORD 25 form is typically used in business relationships where one party needs to verify that another party maintains adequate liability insurance. Common scenarios include:

• Contractor-subcontractor relationships
• Vendor agreements
• Lease agreements
• Service provider contracts
• Licensing requirements

For example, a property manager might require all maintenance contractors to provide an ACORD 25 showing proof of general liability and workers' compensation coverage before allowing them to perform work on the premises.

What is an ACORD 27 Certificate of Insurance?

The ACORD 27 form, officially titled "Evidence of Property Insurance," is specifically designed to provide proof of property insurance coverage. Unlike the ACORD 25, which focuses on liability coverages, the ACORD 27 documents insurance for physical assets such as buildings, business personal property, equipment, and inventory.

The ACORD 27 certificate typically includes:

• Policyholder's name and contact information
• Property insurance carrier details
• Policy number and effective dates
• Property location and description
• Coverage types (building, contents, business interruption)
• Coverage limits and deductibles
• Loss payee or mortgagee information
• Special conditions or exclusions

Common Uses of ACORD 27

The ACORD 27 form is typically used in scenarios where a party has a financial interest in physical property. Common situations include:

• Mortgage lenders requiring proof of building insurance
• Equipment leasing companies verifying coverage on leased equipment
• Commercial property leases requiring tenants to insure leasehold improvements
• Construction projects where lenders need proof of builder's risk coverage
• Asset-based lending where inventory or equipment serves as collateral

For instance, when a business takes out a loan to purchase a commercial building, the bank will typically require an ACORD 27 showing that the property is adequately insured with the bank listed as mortgagee or loss payee.

ACORD 25 vs ACORD 27: Side-by-Side Comparison

When comparing ACORD 25 vs ACORD 27 certificates, several key differences become apparent. Understanding these distinctions helps insurance professionals and risk managers determine which form is appropriate for specific situations.

Purpose and Coverage Focus

• ACORD 25: Documents liability coverages (general liability, auto liability, workers' compensation, umbrella/excess liability)
• ACORD 27: Documents property insurance coverages (buildings, contents, business personal property, equipment)

Interested Parties Terminology

• ACORD 25: Uses "Certificate Holder" and "Additional Insured"
• ACORD 27: Uses "Additional Interest," "Loss Payee," and "Mortgagee"

Information Detail

• ACORD 25: Provides policy limits, coverage types, and basic policy information
• ACORD 27: Includes specific property locations, detailed property descriptions, and coverage forms

Legal Rights Conferred

• ACORD 25: May indicate additional insured status, which extends policy coverage to the certificate holder
• ACORD 27: May indicate loss payee or mortgagee status, which gives rights to insurance proceeds in the event of a loss

Cancellation Provisions

• ACORD 25: States that the insurer will "endeavor to" provide notice of cancellation but does not guarantee it
• ACORD 27: Similar language, but mortgagees and loss payees typically have stronger cancellation notification rights under the actual policy

Pros and Cons of ACORD 25 vs ACORD 27

ACORD 25 Pros

• Widely recognized and accepted across industries
• Comprehensive overview of liability coverages in one document
• Standardized format makes it easy to review and verify coverage
• Can indicate additional insured status
• Most insurance professionals are familiar with its format and content

ACORD 25 Cons

• Does not provide evidence of property insurance
• Limited space for describing specific operations or locations
• Cancellation notice provision is not binding
• Does not guarantee that additional insured endorsements are actually in place
• May not include all policy exclusions or limitations

ACORD 27 Pros

• Specifically designed for property insurance verification
• Includes detailed property descriptions and locations
• Clearly identifies loss payees and mortgagees
• Provides information about specific property coverages and limits
• Can include details about special coverage forms or endorsements

ACORD 27 Cons

• Does not provide evidence of liability insurance
• Less frequently used than ACORD 25, so some parties may be less familiar with it
• May not capture all property-related coverages (e.g., inland marine)
• Similar to ACORD 25, cancellation notice provisions are not binding
• May require additional documentation for complex property schedules

Which Should You Choose: ACORD 25 vs ACORD 27?

The decision between requesting an ACORD 25 or ACORD 27 certificate depends on your specific insurance verification needs and the nature of the business relationship. Here's a decision framework to help you determine which form is appropriate:

Choose ACORD 25 When:

• You need to verify liability insurance coverage
• Your primary concern is protection against third-party claims
• You're hiring contractors or service providers
• You need to be listed as an additional insured
• You're verifying compliance with contractual liability requirements

Real-world example: A property management company hiring a landscaping service would request an ACORD 25 to verify the landscaper has general liability and workers' compensation coverage, with the property management company listed as an additional insured.

Choose ACORD 27 When:

• You need to verify property insurance coverage
• You have a financial interest in physical property
• You're a lender requiring proof of insurance on collateral
• You need to be listed as a loss payee or mortgagee
• You're verifying building, contents, or equipment coverage

Real-world example: A bank providing a commercial mortgage would request an ACORD 27 to verify that the building is properly insured, with the bank listed as mortgagee.

When to Request Both Forms

In some cases, it makes sense to request both ACORD 25 and ACORD 27 certificates. This is typically appropriate when:

• You have interests in both liability protection and property insurance
• You're entering a complex business relationship with multiple risk exposures
• You're both a property owner and contracting for services
• Your contract requires comprehensive insurance verification

Real-world example: A commercial landlord leasing space to a restaurant would request both forms—ACORD 25 to verify the tenant's liability coverage and ACORD 27 to verify insurance on tenant improvements and equipment.

Frequently Asked Questions about ACORD 25 vs ACORD 27

What is the main difference between ACORD 25 and ACORD 27 forms?

The main difference between ACORD 25 and ACORD 27 forms is their purpose and the types of insurance they document. The ACORD 25 (Certificate of Liability Insurance) provides evidence of liability coverages such as general liability, auto liability, and workers' compensation. The ACORD 27 (Evidence of Property Insurance) documents property insurance coverages for buildings, contents, and business personal property. Each form serves a distinct function in the insurance verification process, with ACORD 25 focusing on third-party liability protection and ACORD 27 addressing first-party property coverage.

Can one ACORD form substitute for the other?

No, ACORD 25 and ACORD 27 forms cannot substitute for each other because they serve different purposes and document different types of insurance coverage. The ACORD 25 provides evidence of liability insurance but contains no information about property coverage. Similarly, the ACORD 27 documents property insurance but does not address liability coverages. For comprehensive insurance verification, both forms may be necessary depending on the specific requirements of your business relationship or contract. Using the wrong form could leave significant coverage gaps in your verification process.

How often should ACORD certificates be updated?

ACORD certificates, whether ACORD 25 or ACORD 27, should be updated whenever there are material changes to the underlying insurance policies and at each policy renewal. As a best practice, certificate holders should request new certificates annually at minimum, even for multi-year policies. For high-risk relationships or when compliance is critical, some organizations implement quarterly verification processes. Additionally, contracts often specify the required frequency of certificate updates. Remember that certificates only represent coverage at the time of issuance, so regular updates are essential for maintaining accurate insurance verification records.

Are ACORD certificates legally binding documents?

ACORD certificates, including both ACORD 25 and ACORD 27 forms, are not legally binding documents in themselves. They serve as evidence of insurance at the time of issuance but do not amend, extend, or alter the coverage provided by the actual insurance policies. The certificates explicitly state that they confer no rights upon the certificate holder and that the insurance policies themselves govern coverage. This is why sophisticated risk management programs often request additional documentation, such as copies of actual policy endorsements, especially for additional insured requirements or special coverage provisions.

How can I efficiently manage multiple ACORD certificates?

Efficiently managing multiple ACORD certificates requires a systematic approach to tracking, verification, and renewal monitoring. Many organizations implement certificate of insurance (COI) management software to automate these processes. These specialized systems can track expiration dates, verify coverage compliance with contractual requirements, send automatic renewal requests, and maintain a centralized repository of certificates. For organizations managing hundreds or thousands of certificates, automated solutions like CoverLedger can significantly reduce administrative burden while improving compliance rates and minimizing exposure to uninsured or underinsured third parties.

Conclusion: Making the Right Choice Between ACORD 25 vs ACORD 27

Understanding the key differences between ACORD 25 vs ACORD 27 certificates is essential for effective insurance verification and risk management. These standardized forms serve complementary but distinct purposes—ACORD 25 documents liability coverages, while ACORD 27 provides evidence of property insurance. The choice between them depends on your specific risk exposure and the nature of your business relationships.

For comprehensive protection, many situations require both forms to ensure complete coverage verification. Remember that certificates are snapshots of coverage at a point in time and should be regularly updated. While they provide valuable evidence of insurance, they don't replace the actual policies or guarantee coverage will remain in effect.

Managing certificates of insurance can be challenging, especially for organizations dealing with numerous vendors, contractors, or tenants. Implementing an automated certificate management system can streamline this process, ensuring timely verification and renewal tracking while reducing administrative burden.

Automate your COI tracking in minutes with CoverLedger's advanced certificate of insurance management platform. Our solution handles both ACORD 25 and ACORD 27 forms, providing comprehensive verification, automated renewal tracking, and customized compliance reporting. Start your free trial of CoverLedger today and transform your insurance compliance process.