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                                                                     EXHIBIT 3.1


                          Certificate of Incorporation

                                       of

                               Triad Guaranty Inc.


     FIRST.  The   name  of  the   corporation  is:  Triad  Guaranty  Inc.  (the
"Corporation").

     SECOND. The address of the Corporation's  registered office in the State of
Delaware is 1209 Orange Street,  in the City of Wilmington,  County of Newcastle
(the "Registered  Office").  The name of its registered agent at such address is
The Corporation Trust Company.

     THIRD.  The  purpose of the  Corporation  is to engage in any lawful act or
activity for which a corporation may be organized under the General  Corporation
Law of the State of Delaware as set forth in Title 8 of the  Delaware  Code (the
"GCL").

     FOURTH.  The total  number of shares of all classes of capital  stock which
the Corporation shall have authority to issue is 11,000,000 shares, divided into
two classes as follows:

         1,000,000 shares of Preferred Stock of the par value of
         $0.01 per share ("Preferred Stock"); and

         10,000,000  shares of Common  Stock of the par value of $0.01 per share
         ("Common Stock").

     The designations,  powers,  preferences and rights, and the qualifications,
limitations or restrictions of the above classes of stock are as follows:

                                   DIVISION I

                                 Preferred Stock

     1. The board of  directors is expressly  authorized  at any time,  and from
time to time, to issue shares of Preferred Stock in one or more series,  and for
such  consideration  as the board of directors may  determine,  with such voting
powers,  full or limited but not to exceed one vote per share, or without voting
powers,  and with such  designations,  preferences and relative,  participating,
optional  or  other  special   rights,   and   qualifications,   limitations  or
restrictions  thereof,  as shall be  stated  in the  resolution  or  resolutions
providing for the issue  thereof,  and as are not stated in this  Certificate of

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Incorporation,  or any amendment thereto.  All shares of any one series shall be
of equal rank and identical in all respects.

     2. No  dividend  shall be paid or  declared  on any  particular  series  of
Preferred  Stock  unless  dividends  shall be paid or  declared  pro rata on all
shares of  Preferred  Stock at the time  outstanding  of each other series which
ranks equally as to dividends with such particular series.

     3. Unless and except to the extent otherwise required by law or provided in
the resolution or  resolutions of the board of directors  creating any series of
Preferred  Stock pursuant to this Division I, the holders of the Preferred Stock
shall have no voting  power with respect to any matter  whatsoever.  In no event
shall the  Preferred  Stock be entitled to more than one vote in respect of each
share of stock.  Subject to the  protective  conditions or  restrictions  of any
outstanding  series of Preferred  Stock,  any amendment to this  Certificate  of
Incorporation  which shall increase or decrease the authorized  capital stock of
any class or classes may be adopted by the affirmative  vote of the holders of a
majority of the outstanding shares of the voting stock of the Corporation.

     4. Shares of Preferred Stock  redeemed,  converted,  exchanged,  purchased,
retired  or  surrendered  to the  Corporation,  or which  have been  issued  and
reacquired in any manner,  shall, upon compliance with any applicable provisions
of the GCL, have the status of authorized and unissued shares of Preferred Stock
and may be  reissued  by the board of  directors  as part of the series of which
they were originally a part or may be reclassified  into and reissued as part of
a new series or as a part of any other  series,  all  subject to the  protective
conditions or restrictions of any outstanding series of Preferred Stock.

                                   DIVISION II

                                  Common Stock

     1.  Dividends.  Subject  to  the  preferential  dividend  rights,  if  any,
applicable  to  shares  of  the  Preferred   Stock  and  subject  to  applicable
requirements,  if any,  with respect to the setting  aside of sums for purchase,
retirement or sinking funds for the Preferred  Stock,  the holders of the Common
Stock  shall be  entitled  to  receive  to the  extent  permitted  by law,  such
dividends as may be declared from time to time by the board of directors.

     2. Liquidation.  In the event of the voluntary or involuntary  liquidation,
dissolution,  distribution  of assets or  winding up of the  Corporation,  after
distribution in full of the preferential  amounts,  if any, to be distributed to
the holders of shares of the Preferred Stock,  holders of the Common Stock shall


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be entitled to receive all the remaining  assets of the  Corporation of whatever
kind available for  distribution  to  stockholders  ratably in proportion to the
number of shares of Common Stock held by them respectively.

     3.  Voting  rights.  Except  as may be  otherwise  required  by law or this
Certificate  of  Incorporation,  each holder of the Common  Stock shall have one
vote in respect of each share of stock held by him or her of record on the books
of the Corporation on all matters voted upon by the stockholders.

                                  DIVISION III

                            Elimination of Preemptive
                                     Rights

     No holder of stock of any class of the  Corporation  shall be entitled as a
matter of right to purchase or subscribe  for any part of any unissued  stock of
any  class,  or of any  additional  stock of any class or  capital  stock of the
Corporation, or of any bonds, certificates of indebtedness, debentures, or other
securities  convertible  into  stock  of  the  Corporation,   now  or  hereafter
authorized, but any such stock or other securities convertible into stock may be
issued and disposed of pursuant to  resolution by the board of directors to such
persons,  firms,  corporations or associations  and upon such terms and for such
consideration (not less than the par value or stated value thereof) as the board
of directors  in the  exercise of its  discretion  may  determine  and as may be
permitted by law without action by the stockholders.

     FIFTH. Nominations of persons for election to the board of directors of the
Corporation  may be made at a meeting of  stockholders by or at the direction of
the board of directors or by any stockholder of the Corporation entitled to vote
for the  election  of  directors  at the meeting  who  complies  with the notice
procedures set forth in this Article FIFTH. Such  nominations,  other than those
made by or at the direction of the board of directors, shall be made pursuant to
timely notice in writing to the Secretary of the  Corporation.  To be timely,  a
stockholder's  notice  shall be  delivered  to or  mailed  and  received  at the
principal  executive  offices of the  Corporation not less than 60 days nor more
than 90 days prior to the  meeting;  provided,  however,  that in the event that
less than 70 days' notice or prior public  disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 10th day  following  the
day on which such  notice of the date of the  meeting  was mailed or such public
disclosure was made.  Such  stockholder's  notice shall set forth (a) as to each
person whom the stockholder  proposes to nominate for election or re-election as

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a director,  (i) the name, age,  business address and residence  address of such
person,  (ii) the principal  occupation or employment of such person,  (iii) the
class and number of shares of the Corporation  which are  beneficially  owned by
such  person and (iv) any other  information  relating  to such  person  that is
required to be disclosed in  solicitations of proxies for election of directors,
or is otherwise  required,  in each case  pursuant to  Regulation  14A under the
Securities  Exchange Act of 1934, as amended  (including without limitation such
persons'  written consent to being named in the proxy statement as a nominee and
to serving as a director if elected);  and (b) as to the stockholder  giving the
notice (i) the name and address,  as they appear on the Corporation's  books, of
such  stockholder  and (ii) the  class and  number of shares of the  Corporation
which are beneficially owned by such stockholder. At the request of the board of
directors  any person  nominated  by the board of  directors  for  election as a
director  shall furnish to the  Secretary of the  Corporation  that  information
required to be set forth in a stockholder's notice of nominations which pertains
to the  nominee.  No person  shall be eligible for election as a director of the
Corporation at a meeting of the stockholders unless nominated in accordance with
the procedures set forth in this Article FIFTH.

     SIXTH. The name and mailing address of the incorporator are as follows:  J.
Brett Pritchard, 115 South LaSalle Street, Chicago, IL 60603.

     SEVENTH.  The following  provisions  are inserted for the management of the
business  and the  conduct of the  affairs of the  Corporation,  and for further
definition,  limitation and regulation of the powers of the  Corporation  and of
its directors and stockholders:

     (1) The  business  and  affairs of the  Corporation  shall be managed by or
under the direction of the board of directors.

     (2) The directors  shall have  concurrent  power with the  stockholders  to
make, alter, amend, change, add to or repeal the by-laws of the Corporation.

     (3) The number of  directors  of the  Corporation  shall be as from time to
time fixed by, or in the manner  provided  in, the  by-laws of the  Corporation.
Election  of  directors  need not be by written  ballot  unless  the  by-laws so
provide.

     (4) No director shall be personally liable to the Corporation or any of its
stockholders  for monetary  damages for breach of fiduciary  duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which  involve  intentional  misconduct  or a knowing  violation  of law,  (iii)
pursuant  to Section 174 of the GCL or (iv) for any  transaction  from which the

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director  derived  an  improper  personal  benefit.  If the  GCL is  amended  to
authorize   corporate  action  further  eliminating  or  limiting  the  personal
liability of  directors,  then the  liability  of a director of the  Corporation
shall be eliminated or limited to the fullest extent  permitted by the GCL as so
amended.  Any repeal or modification of this Article SEVENTH by the stockholders
of the  Corporation  shall not  adversely  affect any right or  protection  of a
director of the Corporation  existing at the time of such repeal or modification
with  respect  to  acts  or  omissions   occurring   prior  to  such  repeal  or
modification.

     (5) In  addition  to the powers and  authority  hereinbefore  or by statute
expressly  conferred upon them,  the directors are hereby  empowered to exercise
all such powers and do all such acts and things as may be  exercised  or done by
the  Corporation,  subject,  nevertheless,  to the  provisions  of the GCL, this
Certificate  of  Incorporation,  and any  by-laws  adopted by the  stockholders;
provided,  however, that no by-laws adopted by the stockholders shall invalidate
any prior act of the  directors  which would have been valid if such by-laws had
not been adopted.

     EIGHTH. Meetings of stockholders may be held within or without the State of
Delaware,  as the by-laws may provide.  The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such  place or  places  as may be  designated  from time to time by the board of
directors or in the by-laws of the Corporation.

     NINTH. (1) The Corporation shall indemnify any person who was or is a party
or is  threatened  to be made a party to any  threatened,  pending or  completed
action,  suit  or  proceeding,   whether  civil,  criminal,   administrative  or
investigative  (other than an action by or in the right of the  Corporation)  by
reason  of the  fact  that  he or she is or was a  director  or  officer  of the
Corporation  or is or  was  serving  at the  request  of  the  Corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture,  trust or other  enterprise,  against  expenses  (including  attorneys'
fees),  judgments,  fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action,  suit or proceeding if he
or she acted in good faith and in a manner he or she  reasonably  believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was  unlawful.  The  termination  of any action,  suit or  proceeding by
judgment,  order, settlement,  conviction,  or upon a plea of nolo contendere or
its equivalent,  shall not, of itself,  create a presumption that the person did
not act in good faith and in a manner which he or she reasonably  believed to be
in or not opposed to the best interests of the Corporation, and, with respect to

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any criminal action or proceeding,  had reasonable  cause to believe that his or
her conduct was unlawful.

     (2) The Corporation  shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened,  pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason  of the  fact  that  he or she is or was a  director  or  officer  of the
Corporation,  or is or was  serving  at the  request  of  the  Corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture,  trust or other enterprise against expenses (including attorneys' fees)
and amounts paid in settlement actually and reasonably incurred by him or her in
connection  with the defense or  settlement  of such action or suit if he or she
acted in good faith and in a manner he or she  reasonably  believed  to be in or
not opposed to the best  interests  of the  Corporation  and except that no such
indemnification  shall be made in respect  of any  claim,  issue or matter as to
which such  person  shall  have been  adjudged  to be liable to the  Corporation
unless  and only to the  extent  that  the  Court of  Chancery  of the  State of
Delaware or the court in which such action or suit was brought  shall  determine
upon  application  that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably  entitled to
indemnity for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper.

     (3) To the extent that any person  referred to in paragraphs (1) and (2) of
this Article NINTH has been  successful on the merits or otherwise in defense of
any action,  suit or proceeding  referred to therein or in defense of any claim,
issue or  matter  therein,  he or she  shall  be  indemnified  against  expenses
(including  attorneys'  fees) actually and reasonably  incurred by him or her in
connection therewith.

     (4) Any indemnification  under paragraphs (1) and (2) of this Article NINTH
(unless ordered by a court) shall be made by the Corporation  only as authorized
in the specific case upon a determination  that  indemnification of the director
or  officer  is  proper  in the  circumstances  because  he or she  has  met the
applicable  standard of conduct set forth in said  paragraphs  (1) and (2). Such
determination  shall be made (a) by the board of directors by a majority vote of
a quorum (as defined in the by-laws of the Corporation)  consisting of directors
who were not parties to such action, suit or proceeding, or (b) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs,  by  independent  legal  counsel  in a written  opinion,  or (c) by the
stockholders.

     (5) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil,  criminal,  administrative or investigative action, suit
or proceeding may be paid by the Corporation in advance of the final disposition

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of such  action,  suit or  proceeding  upon receipt of an  undertaking  by or on
behalf of the director or officer to repay such amount if it shall ultimately be
determined  that he or she is not entitled to be indemnified by the  Corporation
as provided in this Article NINTH.

     (6) The Corporation may, to the extent  authorized from time to time by the
board of directors,  grant rights to  indemnification  and to the advancement of
expenses, to any employee or agent of the Corporation or its subsidiaries, or to
any  employee  or agent of any entity  providing  contractual  services  for the
Corporation or its subsidiaries, to the fullest extent of the provisions of this
Article NINTH with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.

     (7) The  indemnification and advancement of expenses provided by or granted
pursuant  to the other  subsections  of this  Article  NINTH shall not be deemed
exclusive  of any  other  rights  to  which  those  seeking  indemnification  or
advancement  of expenses may be entitled under any statute,  by-law,  agreement,
vote of stockholders or disinterested directors or otherwise,  both as to action
in his or her  official  capacity  and as to action in  another  capacity  while
holding such office.

     (8) The Corporation shall have power to purchase and maintain  insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation,  or is or was  serving  at the  request  of  the  Corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and  incurred by him or her in any such  capacity,  or arising out of his or
her  status as such,  whether  or not the  Corporation  would  have the power to
indemnify  him or her  against  such  liability  under  the  provisions  of this
Article.

     (9) For the purposes of this Article NINTH, references to the "Corporation"
shall  include  in  addition  to  the  resulting  Corporation,  any  constituent
corporation   (including  any  constituent  of  a  constituent)  absorbed  in  a
consolidation  or merger which, if its separate  existence had continued,  would
have had power and authority to indemnify its directors, officers, and employees
or agents,  so that any person who is or was a  director,  officer,  employee or
agent of such  constituent  corporation,  or is or was serving at the request of
such  constituent  corporation  as a  director,  officer,  employee  or agent of
another  corporation,  partnership,  joint venture,  trust or other  enterprise,
shall stand in the same position under the provisions of this Article NINTH with

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respect to the resulting or surviving  corporation  as he or she would have with
respect to such constituent corporation if its separate existence had continued.

     (10) For purposes of this Article NINTH,  references to "other enterprises"
shall include  employee  benefit plans;  references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references  to  "serving at the request of the  Corporation"  shall  include any
service as a  director,  officer,  employee  or agent of the  Corporation  which
imposes duties on, or involves services by, such director,  officer, employee or
agent  with  respect  to  an  employee   benefit  plan,  its   participants   or
beneficiaries;  and a person  who acted in good  faith and in a manner he or she
reasonably  believed to be in the interest of the participants and beneficiaries
of an  employee  benefit  plan  shall be deemed to have  acted in a manner  "not
opposed  to the  best  interest  onf the  Corporation"  as  referred  to in this
paragraph.

     (11) The  indemnification  and  advancement  of  expenses  provided  by, or
granted  pursuant to this Article NINTH shall,  unless  otherwise  provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer,  employee  or agent  and  shall  inure  to the  benefit  of the  heirs,
executors,  and  administrators of such a person.  Any repeal or modification of
this Article NINTH shall not adversely  affect any right to  indemnification  or
advancement of expenses of any present or former director,  officer, employee or
agent of the Corporation existing at the time of such repeal or modification.

     (12) If this  Article  NINTH or any portion  hereof is  invalidated  by any
court of competent jurisdiction, then the Corporation shall nevertheless provide
such indemnification and advancement of expenses as would otherwise be permitted
under any portion of this Article NINTH that shall not have been invalidated.

     TENTH.  Whenever a  compromise  or  arrangement  is proposed  between  this
Corporation  and  its  creditors  or any  class  of  them  and/or  between  this
Corporation  and its  stockholders  or any class of them, any court of equitable
jurisdiction  within the State of Delaware may, on the  application in a summary
way of this  Corporation  or of any creditor or stockholder  thereof,  or on the
application of any receiver or receivers  appointed for this  Corporation  under
the  provisions of Section 291 of the GCL or on the  application  of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the  provisions  of Section 279 of the GCL,  order a meeting of the creditors or
class of creditors,  and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs.  If a majority  in number  representing  three-fourths  in value of the
creditors  or  class  of  creditors,   and/or  the   stockholders  or  class  of
stockholders of this Corporation, as the case may be, agree to any compromise or

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arrangement and to any reorganization of this Corporation as consequence of such
compromise  or  arrangement,  the said  compromise or  arrangement  and the said
reorganization  shall, if sanctioned by the court to which the said  application
has been made, be binding on all the creditors or class of creditors,  and/or on
all the stockholders or class of stockholders,  of this Corporation, as the case
may be, and also on this Corporation.

       ELEVENTH.  The Corporation  reserves the right to amend, alter, change or
repeal any provision  contained in this  Certificate  of  Incorporation,  in the
manner now or hereafter  prescribed by statute,  and all rights  conferred  upon
stockholders herein are granted subject to this reservation.

       I, the undersigned,  being the sole incorporator  hereinbefore named, for
the  purpose  of  forming  a  Corporation  pursuant  to the  GCL,  do make  this
certificate,  hereby  declaring and certifying  that the facts herein stated are
true and accordingly have hereunto set my hand this 11th day of August, 1993.



                                         /s/ J. Brett Pritchard
                                         -----------------------------
                                         Incorporator











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                           CERTIFICATE OF AMENDMENT OF
                         CERTIFICATE OF INCORPORATION OF
                               TRIAD GUARANTY INC.
                         ------------------------------


     Triad  Guaranty  Inc., a corporation  organized  and existing  under and by
virtue  of  the  General   Corporation   Law  of  the  State  of  Delaware  (the
"Corporation"), does hereby certify:

     FIRST:  That the Board of  Directors  of the  Corporation  has  unanimously
adopted a resolution  proposing and declaring  advisable the following amendment
to the Certificate of Incorporation of the Corporation:

     "RESOLVED,  that the Certificate of Incorporation of Triad Guaranty Inc. be
     amended by  deleting  the first  paragraph  of Article  FOURTH  thereof and
     substituting the following in its place and stead:

          "FOURTH.  The total  number of shares of all classes of capital  stock
          which the  Corporation  shall have  authority  to issue is  21,000,000
          shares, divided into two classes as follows:

               1,000,000 shares of Preferred Stock of the par value of $0.01 per
               share ("Preferred Stock"); and

               20,000,000  shares of Common  Stock of the par value of $0.01 per
               share ("Common Stock").""

     SECOND:  That an annual meeting of stockholders of the Corporation was duly
called and held on May 22, 1997 upon notice in  accordance  with  Section 222 of
the  General  Corporation  Law of the State of  Delaware  at which  meeting  the
necessary  number of shares as  required  by statute  were voted in favor of the
amendment.

     THIRD:  That  said  amendment  was  duly  adopted  in  accordance  with the
provisions  of  Section  242 of the  General  Corporation  Law of the  State  of
Delaware.

     IN WITNESS  WHEREOF,  Triad Guaranty Inc. has caused this certificate to be
signed by its Chief Executive Officer this 23rd day of May, 1997.


                                            TRIAD GUARANTY INC.


                                            By: /s/ Darryl W. Thompson
                                            -----------------------------------
                                            Darryl W. Thompson, Chief Executive
                                                Officer

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