A COI shows that insurance exists. It doesn’t prove the owner is covered.
“We have their certificate of insurance” is a common reassurance from property owners, developers, and managers when discussing a contractor’s insurance. The certificate arrives, someone checks the limits and expiration dates, and work begins. Everyone assumes the owner is protected.
But a certificate of insurance (COI) does not create coverage or guarantee that the insurer will defend the owner when a claim comes in. If coverage doesn’t respond, the owner may end up paying defense costs, settlements, or losses it expected the contractor’s insurer to cover.
Meaningful protection usually comes from two things: contract terms that require specific coverage, and a review of the actual policy before work begins. This can be true even when the parties use AIA contract documents.
What a COI Does and Doesn’t Do
A COI summarizes a contractor’s insurance information. It does not create coverage, amend the policy, eliminate exclusions, or independently obligate the insurer to defend the owner. Being listed as a certificate holder does not, by itself, make the owner an additional insured, and a certificate generally cannot add protection the underlying policy does not provide.
Even a certificate showing millions of dollars in limits can leave critical questions unanswered. Does the policy cover the actual work? Which ownership and management entities qualify for protection? What exclusions apply? Will coverage respond after construction ends?
Consider this hypothetical: a subcontractor’s employee is injured and sues the property owner and management company. The certificate looked satisfactory, but the endorsements omit the management company, or they impose contractual conditions the parties never satisfied. The owner discovers the gap only when defense costs begin accumulating. By then, it may be funding its own defense, filing claims on its own policy, and pursuing the contractor for coverage that was promised but never delivered.
AIA Documents Help, But They Don’t Close the Gap
AIA contract documents give owners a solid framework, but they don’t fill in the insurance details or confirm that the coverage exists. Both steps typically fall to the owner.
Developed by the American Institute of Architects, AIA contract documents are a family of standardized, coordinated forms that govern the relationships among owners, architects, contractors, consultants, and subcontractors on construction and design projects. Different forms suit different project structures, including new construction, renovations, building improvements, and related design services. They address scope, payment, changes, scheduling, insurance, indemnification, and dispute resolution. Although they help participants define and manage their responsibilities, each form still requires careful completion and tailoring for the specific project.
Insurance is a good example. A101-2017, the standard owner-contractor agreement for a stipulated sum, puts insurance requirements and project-specific limits in a separate Exhibit A, “Insurance and Bonds.” Related provisions sit in Article 11 of the A201-2017 General Conditions. If the exhibit isn’t completed with care, the contract may not require the coverage the owner needs. Even a well-drafted exhibit only states what coverage is required. Signing the agreement and collecting a COI doesn’t confirm that the contractor has obtained compliant coverage.
Owners that add their own insurance terms, such as a rider, typically coordinate them with Exhibit A, the General Conditions, any supplementary conditions, and the subcontracts. That coordination includes specifying which terms control if a conflict arises. Without it, a rider meant to close a gap can create a new one.
Five Areas That Strengthen Owner Protection
Closing the gap takes more than a signed contract and a COI, and timing matters. Gaps are typically easiest to address before the contract is signed and work begins, while the owner still has leverage. Owners and their counsel often focus on the following five areas:
- Identifying who may need protection. The party that signs the contract may not be the fee owner, ground lessee, property manager, or operating company. Well-drafted contracts typically name each entity, and protection depends on the policy extending coverage to each one. A broad reference to “affiliates” generally can’t bind an insurer on its own.
- Reviewing the endorsements, not just the certificate. Additional insured coverage that addresses both ongoing and completed operations is often a key consideration, since claims can arise years after a project ends. So are primary and noncontributory coverage, waivers of subrogation, and umbrella or excess coverage that follows the primary policy. A certificate that shows excess limits doesn’t by itself establish that the owner can access them.
- Extending requirements through subcontractor tiers. Many owners require written insurance obligations and documentation from subcontractors at every tier, hold the contractor responsible for noncompliance, and make insurance approval a condition of mobilization. Tracking renewals for the full required coverage period can also matter.
- Keeping a contractual backstop. Defense, indemnification, and insurance procurement obligations can give owners recourse if coverage fails, particularly when they survive for an appropriate period and coordinate with the AIA provisions. Enforceability depends on state law, since many states limit indemnification for an owner’s own negligence. A contract can’t rewrite an insurer’s policy, and recovering from the contractor depends partly on its financial resources.
- Addressing design professionals separately. Architects and engineers usually require provisions tailored to professional liability insurance, including claims-made reporting and coverage that continues after their services end
The Bottom Line
A certificate of insurance is a starting point, not a safeguard by itself. The owner’s protection typically depends on three things working together: an enforceable contract, insurance that will actually respond, and verification of that coverage before work begins. Each is typically easier to secure at the outset of a project than after a claim arrives. Owners that treat insurance review as part of contracting, rather than a box checked at mobilization, may be better positioned to avoid paying for risks they believed they had transferred.
Jamie Duberman brings over 25 years of legal and business experience in the real estate sector. He regularly handles a wide range of transactions relating to residential, commercial, industrial and new development real estate matters. Previously, Jamie co-founded and served as General Counsel of a regional title insurance company and mortgage company.