As published in Leasing News: September 17, 2010
“ACORD, the insurance industry standards setting organization, has just released a new ‘Certificate of Vehicle and Equipment Insurance’ that all lessors and lenders should now request from their customers and their agents when documenting evidence of insurance on any leased or financed equipment or vehicle,” said Steve Dinkelaker, President of American Lease Insurance Agency Corporation (ALI), Sunderland, Massachusetts. “Called the ACORD 23, the new Certificate combines for the first time on one certificate information about both property and liability insurance coverage for any leased or financed equipment or vehicle.”
“For the past few decades, lessors often had to track down several insurance certificates before they could confirm the existence of sufficient coverage,” Dinkelaker told Leasing News. Dinkelaker participated actively in a three year working group effort to revamp ACORD certificates, and served as sponsor for a customized certificate that could be used to document evidence of insurance with leasing and financing of any equipment or vehicle transactions.
“When in full use by the tens of thousands of insurance agents around the US, the ACORD 23 will dramatically simplify verification of coverage on any leased and financed equipment or vehicle for lessors, lenders and their servicing partners. Lessors or financers of equipment or vehicles who rely on ACORD Certificates to document evidence of coverage should revise their lease and finance agreements to request that evidence now be sent to them using ‘ACORD 23 or its equivalent.'”
BOTH PROPERTY AND LIABILITY INFORMATION ON ONE FORM
The New ACORD 23, unlike the present ACORD 24 (property coverage only) or ACORD 25 (liability coverage only), provides proof of both property and liability coverage, showing the leasing company as “lender’s loss payee” (with respect to property) and “additional insured” (with respect to liability). This enables both lenders and lessors (and their servicers) to obtain proof of ALL required insurance on one form.
USED FOR BOTH EQUIPMENT OR VEHICLES
The ACORD 23 form allows agents for borrowers/lessees to provide proof of insurance on either equipment or a titled vehicle. The form provides a clear and defined space for description of either equipment or a vehicle, and distinguishes between the property and liability insurance information/requirements for both asset types.
ACTUAL PROOF VS. SIMPLY A “REQUEST”
The New ACORD 23 uniquely provides a space for the agent completing the form to select one of two options:
- additional interest (i.e. equipment leasing company) has been added to the policy as confirmed by the insurer.
- a request has been made to the insurer to add the additional interest to the policy
If option 1 is checked, lessors and lenders can generally rely on the coverage as in force for their interest in the equipment or vehicle. If option 2 is selected, then the interest of the lender/lessor may not yet be protected and an additional request will need to be made by the lessor/lender or their servicer before coverage can be relied on. This is a significant enhancement to the previous ACORD forms (24 and 25), which made no distinction between “requested” and “confirmed” insurance information.
“With the new ACORD 23, leasing/finance companies and their servicers will have a single, simple form to use to ascertain whether ALL necessary insurance coverage (both property and liability) is present and in effect to fulfill contractual requirements and protect their financial interest,” Dinkelaker says. “Equipment leasing and financing companies will be better served in all future requests of their customers to ask for proof of insurance using the ACORD 23.”
Steve Dinkelaker, President
American Lease Insurance
654 Amherst Rd.
Sunderland, MA 01375
View the actual ACORD 23 Certificate available to all agent or insurer members of ACORD.
Video on the new ACORD 23 (approx. 5 minutes)