The carrier listed on an ACORD form is not just a name in a box. That carrier is the entity responsible for paying your claims, defending your lawsuits, and backing the coverage promises your subcontract requires. When GCs overlook carrier-related issues on ACORD forms, they discover the problem at the worst possible moment: after a loss.

An analysis of construction insurance disputes from 2020 to 2024 found that 18% of denied additional insured claims involved an ACORD insurance carrier issue that could have been caught during certificate review. This article examines the most common carrier mistakes and shows you how to spot them before they become expensive problems.

Mistake 1: Not Verifying the Carrier's AM Best Rating

Every ACORD 25 lists carriers by name and NAIC number. Most GCs check that a carrier name appears in the insurer box and move on. That is not enough.

AM Best assigns financial strength ratings that predict a carrier's ability to pay claims. The rating scale runs from A++ (Superior) to F (In Liquidation). Construction industry standard requires A- VII or better, meaning the carrier has at least a "Strong" financial condition and a financial size of $100 million or more.

Why this matters in dollars: Carriers rated B+ or below have a historical insolvency rate of 1.2% over a five-year period. A-rated carriers sit at 0.15%. That eightfold difference hits you when a carrier cannot pay a claim on your project.

How to catch it: Check AM Best ratings for every carrier on every ACORD 25. The AM Best website offers free basic lookups by company name or NAIC number. Build a carrier watchlist and flag any sub whose carrier falls below A- VII.

Real-world impact: A Texas GC accepted an ACORD 25 from a drywall sub listing a carrier rated B++. The carrier entered rehabilitation 14 months later. A fire on the project generated $2.1M in damages. The state guaranty fund capped payment at $300,000. The GC absorbed the remaining $1.8M because their own GL policy excluded losses where the sub's carrier was available but insolvent.

Mistake 2: Ignoring Surplus Lines Carriers

Surplus lines carriers (also called non-admitted carriers or excess and surplus lines carriers) operate differently from admitted carriers. They are not backed by state guaranty funds, meaning if they go insolvent, there is no safety net.

On an ACORD 25, surplus lines carriers sometimes appear with a note in the description of operations or a code next to the carrier letter. Sometimes there is no indication at all. About 22% of construction subcontractors carry at least one policy through a surplus lines carrier, particularly for specialty trades like demolition, asbestos abatement, and pile driving.

Surplus lines coverage is not inherently bad. Lloyd's of London syndicates and large E&S carriers like Scottsdale and Lexington are financially strong. The problem is when GCs accept surplus lines coverage without knowing it, and without verifying the carrier's strength independently.

Carrier Type	Guaranty Fund Backed	Rate Regulation	Typical Trades
Admitted	Yes	State-regulated	General trades, electrical, plumbing
Surplus Lines	No	Minimal regulation	Demolition, environmental, high-risk specialty
Risk Retention Group	No	Domiciliary state only	Niche groups (architects, engineers)

How to catch it: Cross-reference the NAIC number on the ACORD 25 with your state's admitted carrier list. If the carrier does not appear, it is likely surplus lines. Then verify the carrier's financial strength through AM Best and confirm that surplus lines taxes and filing requirements have been met in your project state.

Mistake 3: Accepting a Carrier Not Licensed in the Project State

A carrier must be licensed (admitted) or properly filed (surplus lines) in the state where your project is located. An ACORD 25 listing a carrier that is admitted in Georgia but not in Florida creates a problem for your Florida project.

Unlicensed carrier issues lead to three specific problems:

Claims may not be enforceable. If the carrier is not authorized to do business in the project state, policy enforcement becomes complicated. Courts in some states have voided coverage from unlicensed carriers.
No guaranty fund protection. Even admitted carriers only trigger guaranty fund coverage in states where they are licensed. An out-of-state admitted carrier provides no guaranty fund backstop in your project state.
Regulatory penalties. Some states impose fines on parties who knowingly accept coverage from unlicensed carriers. Fines range from $500 to $25,000 per violation depending on the state.

How to catch it: Use your state's Department of Insurance online lookup tool. Enter the carrier's NAIC number or name. Confirm active status in the project state. For surplus lines carriers, verify the surplus lines filing through the state's surplus lines stamping office.

Mistake 4: Confusing Certificate Holder with Additional Insured

This is not strictly a carrier mistake, but it involves how the carrier's obligations flow to you through the ACORD form. GCs confuse these two statuses constantly, and the confusion has real financial consequences.

Certificate holder: You receive copies of the certificate and cancellation notices. You have NO coverage rights under the policy. The carrier owes you nothing beyond notification.

Additional insured: You have coverage rights under the sub's policy for claims arising from the sub's work. The carrier must defend and indemnify you (within policy terms) as if you were a named insured for covered operations.

On an ACORD 25, your company name appears in the certificate holder box at the bottom. Additional insured status appears as a checked box in the coverage section and should be described in the description of operations field.

About 34% of GCs we surveyed believed that being listed as certificate holder gave them claim rights. It does not. Only additional insured status does.

How to catch it: Confirm the additional insured box is checked for GL and umbrella policies. Read the description of operations for AI endorsement references (CG 20 10, CG 20 37). Request a copy of the actual endorsement from the sub's broker.

Mistake 5: Not Matching Policy Numbers to Carrier Systems

The ACORD 25 lists policy numbers for each coverage type. These numbers should match the carrier's records exactly. Mismatched policy numbers create problems in two scenarios.

First, the policy number on the certificate may be a quote number or application number that was never bound. The sub's broker may have issued the certificate prematurely. This happens on about 3% of certificates based on carrier audit data.

Second, the policy number may belong to a different insured. Data entry errors in agency management systems can pull the wrong policy number into the certificate. When you file a claim under that policy, the carrier discovers you are not on it.

How to catch it: For subs on projects over $5M, request carrier confirmation of the policy number. Many carriers offer online policy verification by entering the policy number and insured name. If the carrier cannot confirm the policy, do not accept the certificate.

Mistake 6: Overlooking Carrier Changes at Renewal

A sub's GL carrier in year one may not be the same carrier in year two. When policies renew, subs sometimes switch carriers for better pricing. The new carrier may have a different rating, different licensing status, or different endorsement capabilities.

If your tracking system only captures the initial ACORD 25 and does not re-verify at renewal, you may be operating under a carrier that does not meet your requirements.

How to catch it: At every renewal, treat the new certificate as a first-time submission. Run the full carrier verification process: AM Best rating, state licensing, surplus lines status, and policy number confirmation. Do not assume the renewal carrier matches the original.

Mistake 7: Failing to Verify the Carrier on Umbrella and Excess Policies

GCs often verify the primary GL carrier but skip verification on the umbrella or excess carrier. These are frequently different companies. An umbrella policy with a $10M limit from a carrier rated B+ provides less real protection than a $5M umbrella from an A-rated carrier.

Umbrella and excess carriers have additional complexity. Excess policies may be "following form" (matching the underlying policy terms) or "stand-alone" (with their own terms and exclusions). A following-form excess policy from a weak carrier paired with a strong primary carrier creates a gap at the layer where you most need protection: the large-loss scenario.

How to catch it: Apply the same AM Best and licensing verification to umbrella/excess carriers as you do to primary carriers. Check whether the excess policy follows form or has independent terms. If independent, request the policy terms summary.

Mistake 8: Not Understanding Waiver of Subrogation Carrier Implications

A waiver of subrogation on the ACORD 25 means the sub's carrier waives its right to sue you for claim recovery. Without this waiver, the carrier pays the sub's claim and then comes after you for reimbursement.

The carrier-related mistake here is assuming all carriers honor waiver of subrogation endorsements the same way. Some carriers restrict waivers to claims arising from the named insured's work only. Others exclude waivers for certain claim types. The ACORD 25 checkbox does not capture these nuances.

How to catch it: Request the actual waiver of subrogation endorsement from the sub's broker. Review the endorsement language for restrictions or exclusions. If the carrier's waiver endorsement is narrower than your contract requires, negotiate with the sub before work begins.

The Carrier Verification Checklist

Verification Step	Tool/Source	Time Required	Risk If Skipped
AM Best rating	ambest.com	2 minutes	Insolvent carrier, unrecoverable claims
State licensing	State DOI website	3 minutes	Unenforceable coverage, regulatory fines
Surplus lines status	State stamping office	5 minutes	No guaranty fund protection
NAIC number validation	naic.org	1 minute	Fraudulent or inactive carrier
Policy number confirmation	Carrier portal or phone	5-10 minutes	Wrong policy, wrong insured
Umbrella carrier verification	Same as primary	5 minutes	Weak protection at large-loss layer

Total time per subcontractor: 20-25 minutes for manual verification. Automated platforms reduce this to under 2 minutes per sub.

Frequently Asked Questions

What is an acceptable AM Best rating for a construction subcontractor's carrier? The industry standard is A- VII or better (Excellent financial strength, $100M+ financial size). Some owner-controlled insurance programs (OCIPs) and large-project specifications require A VIII or A+ IX. Never accept a carrier below B+ for any construction coverage.

Can a surplus lines carrier provide good coverage for construction? Yes. Many strong surplus lines carriers specialize in construction risks. The concern is not the surplus lines designation itself, but the lack of guaranty fund protection and the need for independent financial verification. Verify the carrier through AM Best and your state's surplus lines regulations.

How often do construction insurance carriers become insolvent? Between 2015 and 2024, 47 property/casualty carriers entered insolvency proceedings in the United States. Of those, 9 had significant construction industry exposure. The rate is low for A-rated carriers but increases substantially below the B+ threshold.

What should I do if a sub's carrier is not licensed in my project state? Notify the sub that their carrier must be licensed or properly filed in the project state. The sub should work with their broker to either confirm surplus lines compliance or switch to a carrier that is admitted in the project state. Do not allow work to begin until the carrier issue is resolved.

Does the ACORD 25 tell me if a carrier is surplus lines? Not always. The form may include surplus lines notices in the description of operations or via special codes, but there is no dedicated field for surplus lines status. You must independently verify carrier licensing status through state records.

How do I verify a carrier's NAIC number? Visit naic.org and use the Company Code Lookup tool. Enter the NAIC number from the ACORD 25. The result shows the carrier's full legal name, state of domicile, and active status. If the NAIC number returns no result or a different company name, the certificate may contain an error or a fraudulent carrier reference.

Carrier verification should not take 25 minutes per sub. SubcontractorAudit automates AM Best checks, state licensing validation, and policy number verification across your entire subcontractor roster. See how COI tracking works.