How to Read an ACORD 25 Form: A Complete Guide to Certificate of Liability Insurance

Understanding how to read an ACORD 25 form is essential for businesses that need to verify insurance coverage of contractors, vendors, or partners. This Certificate of Liability Insurance provides crucial information about a company's insurance policies and coverage limits. In this comprehensive guide, we'll break down each section of the ACORD 25 form, explain what to look for, and help you ensure proper compliance with your insurance requirements.

What is an ACORD 25 Form?

The ACORD 25 form, officially known as the "Certificate of Liability Insurance," is a standardized document created by the Association for Cooperative Operations Research and Development (ACORD). This form serves as evidence that a business has active insurance coverage. It summarizes key information about the policyholder's insurance, including policy numbers, coverage types, limits, and effective dates.

While not a contract itself, the ACORD 25 form is widely recognized across industries as the standard format for verifying insurance coverage. Learning how to read an ACORD 25 form correctly helps protect your business from uninsured or underinsured third parties.

Prerequisites for Reading an ACORD 25 Form

Before diving into the details of how to read an ACORD 25 form, make sure you have:

• A copy of the ACORD 25 Certificate of Liability Insurance from your vendor/contractor
• Your company's insurance requirements for vendors/contractors
• Basic understanding of insurance terminology
• Access to your risk management or legal department (if available)

Time Required and Difficulty Level

Time Required: 10-15 minutes per certificate

Difficulty Level: Moderate - While the ACORD 25 form is standardized, it contains insurance terminology and coverage details that may be unfamiliar to beginners. With this guide, even those new to insurance verification will be able to effectively read and analyze these certificates.

Step 1: Verify the Certificate Holder Information

The first step in learning how to read an ACORD 25 form is to check the certificate holder information, typically found in the bottom left corner of the form.

1. Confirm that your company is listed as the certificate holder
2. Verify that your company name and address are spelled correctly
3. Check if you're listed as an "Additional Insured" (this may be indicated in this section or in the description of operations box)

Why this matters: Being correctly listed as a certificate holder ensures you'll receive notices about policy changes or cancellations. Additional insured status provides you with direct coverage under their policy.

Step 2: Check the Insured's Information

Next, examine the insured's details, located in the upper left portion of the ACORD 25 form.

1. Confirm the vendor/contractor's legal business name
2. Verify their current business address
3. Ensure this matches the company you're contracting with

Why this matters: Sometimes companies operate under different names or have multiple subsidiaries. Verifying this information ensures the certificate covers the specific entity you're working with.

Step 3: Review the Insurance Company Information

The "Insurers Affording Coverage" section lists the insurance companies providing coverage to the insured.

1. Note the names of the insurance companies (labeled as Insurer A, B, C, etc.)
2. Check if they're reputable, financially stable insurers
3. If required by your company, verify their AM Best rating or other financial strength indicators

Why this matters: Insurance from financially unstable companies might not provide reliable coverage when needed. Some contracts specify minimum insurer ratings (like A- or better from AM Best).

Step 4: Examine the Coverage Types and Limits

This is the core section when learning how to read an ACORD 25 form. The middle portion details different types of liability insurance and their coverage limits.

General Liability Insurance

1. Verify that the "Commercial General Liability" box is checked
2. Check the policy number and which insurer is providing this coverage (A, B, C, etc.)
3. Confirm coverage limits meet your requirements for:

• Each Occurrence (typically $1M or more)
• Damage to Rented Premises
• Med Exp (Any one person)
• Personal & Adv Injury
• General Aggregate (typically $2M or more)
• Products-Comp/Op Agg

Automobile Liability

1. Check if the "Any Auto" box is marked (preferred) or which specific auto types are covered
2. Verify the Combined Single Limit (typically $1M minimum)
3. If split limits are shown, check Bodily Injury and Property Damage limits separately

Umbrella/Excess Liability

1. Check if umbrella coverage is included (provides additional coverage above primary policies)
2. Verify the Each Occurrence and Aggregate limits

Workers Compensation

1. Confirm Workers Compensation coverage is included if the vendor has employees
2. Check that Employers Liability limits meet your requirements (typically $500K/$500K/$500K or $1M/$1M/$1M)

Why this matters: These coverage types and limits protect you from liability if the contractor causes damage or injury while working for you. Inadequate coverage could leave your company financially exposed.

Step 5: Verify Policy Effective and Expiration Dates

For each policy type, the ACORD 25 form shows when coverage begins and ends.

1. Check that all policies are currently in effect (not expired)
2. Note when policies will expire
3. Ensure coverage will remain active throughout your project or contract duration
4. Set up a tracking system to request updated certificates before expiration

Why this matters: Expired insurance provides no protection. Tracking expiration dates is crucial for maintaining continuous coverage verification.

Step 6: Review the Description of Operations

The "Description of Operations/Locations/Vehicles" box contains critical information about additional insureds, waivers, and specific coverage details.

1. Check if your company is listed as an Additional Insured
2. Look for specific endorsement numbers that add you as an Additional Insured
3. Verify if a Waiver of Subrogation is included (prevents their insurer from coming after you)
4. Confirm that Primary and Non-Contributory language is included if required
5. Check if the specific project or location is referenced

Why this matters: This section contains crucial endorsements that extend coverage to your company. Without proper additional insured status, you may not be protected by their insurance.

Step 7: Check the Cancellation Notice Period

The bottom right portion of the ACORD 25 form indicates how much notice you'll receive if policies are canceled.

1. Standard language provides 30 days notice (10 days for non-payment)
2. Check if this meets your contractual requirements
3. Note that some states have specific requirements for cancellation notices

Why this matters: This notice period gives you time to require the vendor to reinstate coverage or find a replacement before you're left exposed.

Step 8: Verify the Certificate Issuer and Signature

The final section of the ACORD 25 form identifies who issued the certificate.

1. Check the insurance agency or broker name
2. Verify contact information is provided
3. Confirm the certificate is signed (physically or electronically)

Why this matters: Having the issuer's contact information allows you to verify the certificate's authenticity or ask questions if needed.

Common Mistakes to Avoid When Reading ACORD 25 Forms

• Accepting expired certificates or those about to expire
• Missing the difference between "Named Insured" and "Additional Insured"
• Overlooking inadequate coverage limits
• Not checking that all required policy types are included
• Failing to verify additional insured endorsements in the Description of Operations
• Accepting certificates without proper signature or authorization
• Not setting up reminders for certificate renewal before expiration

Troubleshooting Tips for ACORD 25 Form Issues

Even after learning how to read an ACORD 25 form, you might encounter these common issues:

Missing Additional Insured Status

Solution: Request a corrected certificate specifically asking for additional insured endorsement to be listed in the Description of Operations box.

Coverage Limits Too Low

Solution: Reference your contract requirements and request increased coverage to meet minimum standards. If the vendor cannot increase primary coverage, sometimes an umbrella policy can make up the difference.

Missing Required Coverage Types

Solution: Clearly communicate which coverage types are missing and why they're required for your project or relationship.

Certificate About to Expire

Solution: Request an updated certificate 30 days before expiration. Implement a tracking system to monitor expiration dates.

Next Steps After Reading an ACORD 25 Form

1. Document your review and compliance status
2. Request corrections for any deficiencies
3. Set up expiration tracking (calendar reminders or specialized software)
4. Store certificates securely and accessibly
5. Consider implementing a Certificate of Insurance management system for multiple vendors

Managing multiple ACORD 25 forms manually can be time-consuming and error-prone. Automated solutions like CoverLedger can streamline this process, ensuring you never miss an expiration or compliance issue.

Frequently Asked Questions About Reading ACORD 25 Forms

What's the difference between being a certificate holder and an additional insured?

A certificate holder simply receives a copy of the certificate and notification of cancellation. An additional insured actually receives coverage under the policy. Being listed as a certificate holder does not provide you with any insurance protection. Always verify you're listed as an additional insured in the Description of Operations box if required by your contract.

How often should I request updated ACORD 25 forms from vendors?

You should request a new certificate whenever a policy expires or renews. For ongoing relationships, this typically means annually. However, for critical vendors or high-risk projects, you might want to verify coverage more frequently. Best practice is to request new certificates 30 days before the current one expires.

What does "Primary and Non-Contributory" mean on an ACORD 25 form?

This important language means the vendor's insurance will respond first (primary) to a claim before your insurance, and that their insurer won't seek contribution from your insurance (non-contributory). This protects your claims history and policy limits. Look for this language in the Description of Operations section if required by your contract.

Is an ACORD 25 form proof of insurance coverage?

While an ACORD 25 form provides evidence of insurance, it is not the insurance policy itself and doesn't guarantee coverage. The certificate typically includes a disclaimer stating it confers no rights and doesn't amend or extend coverage. For absolute verification, you would need to review the actual policy, though this is rarely practical. The certificate is the standard accepted practice for verification.

What should I do if a vendor's ACORD 25 form doesn't meet our requirements?

Communicate the specific deficiencies to the vendor in writing, referencing your contractual requirements. Give them a reasonable deadline to provide a compliant certificate. If they cannot meet your requirements, you'll need to decide whether to waive certain requirements (not recommended without legal consultation), find another vendor, or require them to purchase additional coverage.

Conclusion: Mastering How to Read ACORD 25 Forms

Learning how to read an ACORD 25 form is an essential skill for risk management and vendor compliance. By following the steps outlined in this guide, you can confidently verify insurance coverage, identify potential gaps, and ensure your business is properly protected when working with contractors and vendors.

Remember that certificate management becomes increasingly complex as your business grows and you work with more vendors. Manual tracking can lead to missed expirations, incomplete coverage verification, and potential liability exposure.

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