How to Respond When a Client Requests Unusual COI Endorsements or Higher Limits

Content pillar: Certificates of Insurance (COI) — Verification & Templates
Focus: HVAC contractor insurance — U.S. market (examples from Houston, TX; Miami, FL; Los Angeles, CA)

Understanding how to handle client requests for unusual endorsements or higher limits is essential for HVAC contractors who want to win jobs without taking on unacceptable risk. This guide gives a practical, step‑by‑step playbook plus cost benchmarks, negotiation tactics, and compliance checks you can use immediately.

Why these requests happen (and why they matter)

Clients — general contractors, building owners, property managers, or municipalities — often ask for:

• Additional Insured (AI) endorsements naming the client;
• Waiver of Subrogation in favor of the client;
• Higher limits (e.g., $2M or $5M general liability instead of the typical $1M);
• Specific policy wording or location-based endorsements.

These items are risk‑transfer tools. They affect your insurer’s exposure and sometimes your premium or underwriting eligibility. A poorly handled request can delay start dates, lose bids, or expose you to uninsured liability.

Quick checklist to use immediately when a client requests something unusual

1. Get the request in writing (email or contract clause). Ask the client to send exact COI wording or a sample endorsement they require.
2. Review your current policies (GL, Auto, Workers’ Comp, Umbrella). Note limits, retroactive dates, and exclusions.
3. Contact your insurer or broker with the written request. Ask whether they:
   • Can issue the endorsement;
   • Will charge an administrative fee;
   • Require schedule changes or underwriting review.
4. Provide a formal quote or decline in writing to the client with alternatives if you cannot comply.
5. Negotiate: propose compensating contract language (e.g., indemnity tiers, phase‑specific coverage) or offer a short‑term increase where feasible.
6. Obtain the actual endorsement (ISO or company form) — NOT just a COI that lists “Additional Insured” without the endorsement form.

Typical cost impact: realistic U.S. benchmarks

Costs vary by state, payroll, payroll class codes, claims history, and insurer. Use these industry ranges to set client expectations:

• Typical base general liability for a small HVAC contractor:
  • Monthly: $30–$120
  • Annual: $360–$1,440
    (Sources: Next Insurance HVAC product, Insureon overview)
• Common policy limits requested: $1,000,000 per occurrence / $2,000,000 aggregate (typical) vs higher requests like $2M/$4M or $5M/$5M.
• Adding an Additional Insured endorsement:
  • Often no extra premium but may be subject to administrative fees $0–$50 per endorsement or approval requirements (varies by carrier).
• Raising policy limits:
  • Expect 20–50% increase in premium when moving from $1M/2M to $2M/4M, and a larger jump to $5M — price sensitive to location and loss history.

Sources:

• Next Insurance: HVAC coverage overview and sample pricing: https://www.nextinsurance.com/industries/hvac/
• Insureon: HVAC contractor insurance guide (cost ranges): https://www.insureon.com/small-business-insurance/hvac-contractor
• Market context for contractor pricing and carrier offerings: The Hartford (HVAC Contractor Insurance): https://www.thehartford.com/business-insurance/hvac-contractor

Sample client response templates (concise, professional)

• If you can comply:
  • “Thanks for the request. We can provide an Additional Insured endorsement and Waiver of Subrogation in favor of [Client Name]. The insurer confirms an administrative fee of $25 and final endorsement form will be provided prior to mobilization.”
• If you need more time for underwriting:
  • “We need 3–5 business days to secure approval from our carrier to add [requested endorsement/limit]. We’ll provide a formal quote for any premium adjustment or fee.”
• If you cannot meet the request:
  • “We cannot provide [specific endorsement/limit] at this time. Options: (1) we can provide a $2M umbrella at additional premium of $X; (2) accept phased limits per scope; or (3) we can supply a hold‑harmless and provide primary GL AI for the named operations only.”

Negotiation strategies that win more work

• Offer a compromise such as project‑specific limits instead of a blanket policy increase. Example: raise to $2M for the duration of one project only.
• Propose an umbrella policy to meet higher limits more affordably (often cheaper than raising primary GL substantially).
• Limit AI endorsements to ongoing operations and completed operations for the specific project or to named operations only.
• Require the client to sign a written hold-harmless or accept a contractual cap if insurers decline unlimited AI wording.

State and location considerations (examples)

• Texas (Houston / Dallas): Workers’ compensation is not mandatory for most private employers in Texas, but clients often require proof of coverage or equivalent — check municipal procurement rules in Houston.
• Florida (Miami / Orlando): High hurricane risk can affect premiums and reinsurer appetite; carriers may restrict coverage language after catastrophic events.
• California (Los Angeles / San Diego): Contractors face stricter local building codes and licensing enforcement — carriers scrutinize licensing and claims history closely.

Always verify local contract or municipality insurance specifications before bidding.

When to walk away

• Carrier will not provide the endorsement and client insists on ambiguous or unlimited AI wording that broadens coverage beyond your policy intent.
• Required endorsements create materially unacceptable premium increases or retroactive exposures.
• Contract adds broad indemnity or additional insured duties that shift disproportionate risk to your company.

If you walk away, provide a professional decline and offer alternatives that reduce the client’s exposure without exposing you.

Quick reference comparison: endorsement vs. higher limits vs. umbrella

Documentation best practices (avoid disputes)

• Keep the issued endorsement form (not just the COI) in the project folder.
• Log every COI request and issuance date, insurer contact, and policy effective/expiration dates. Use an automated COI tracker if you handle many clients. (See: COI Expiration Tracking and Renewal Workflows for Busy HVAC Businesses.)
• Use pre‑approved COI templates so you can respond quickly to standard requests: COI Templates Every HVAC Contractor Should Use: What to Include and What to Avoid.

Further reading (internal resources to strengthen your COI process)

• Reading a COI: How HVAC Contractors Verify Coverage Quickly and Accurately
• Step-by-Step Guide to Verifying Additional Insured Endorsements on a Certificate of Insurance
• COI Templates Every HVAC Contractor Should Use: What to Include and What to Avoid

Final checklist before you send the COI or endorsement

• Confirm the endorsement form language matches the contract requirement.
• Verify effective dates and that coverage includes the job site address.
• Confirm limits, deductibles, and that umbrella/primary policies follow form if used.
• Ensure certificate holder name and address are exact per the contract.

Handling unusual COI requests professionally preserves margins and builds client trust. With clear documentation, quick insurer communication, and strategic negotiation (umbrella policies, phased limits, or AI restrictions), most requests can be satisfied without taking on undue risk.

Sources

• Next Insurance — HVAC coverage overview and example pricing: https://www.nextinsurance.com/industries/hvac/
• Insureon — HVAC contractor insurance guide and cost ranges: https://www.insureon.com/small-business-insurance/hvac-contractor
• The Hartford — HVAC contractor insurance products and guidance: https://www.thehartford.com/business-insurance/hvac-contractor