Certificates of Insurance

What Is a Certificate of Insurance?

A certificate of insurance (COI) is a document from your insurer to show you have business insurance. This is also called a certificate of liability insurance or proof of insurance. With a COI, your clients can make sure you have the right insurance before they start working with you.

Why Do I Need to Provide a Certificate of Insurance?

It’s important for all small business owners to have a certificate of insurance. Businesses, independent contractors or customers may ask to see proof of insurance before they agree to work with you.

If the work you do has a high risk of loss or damage, you’ll need a COI. Insurance can help protect your business from different risks and also help to protect your clients as well.

For example, let’s say you’re submitting a bid to construct a new building. To have the winning bid, there’s likely a condition to provide a general liability insurance certificate that proves you have an active policy to protect against bodily injury and property damage claims.

Why Ask for a Certificate of Insurance?

Before another company works for you, it’s a good idea to ask for a COI to make sure they have the right insurance. If they don’t, a person can file a claim under your policy.

To give you a better understanding, let’s say your construction company hires a subcontractor. The subcontractor causes $200,000 worth of property damage while working on the job. If they don’t have the right small business liability insurance, you may have to pay for the damage.

You can avoid this situation if you ask for proof of insurance before any work begins. If you find a gap in their coverage, ask them to get the correct insurance and give you an updated COI. If they don’t agree, you can find someone new to work with.

When you’re reviewing a COI, make sure it:

  • Is issued by a legitimate insurance company

  • Matches the name of the person or company you’re hiring

  • Has the right coverages

  • Lists each coverage amount

  • Has a policy period that won’t expire until after completing your project

What Does a Certificate of Insurance Typically Include?

The policyholder on a COI is the “insured.” Other basic information on a certificate of insurance includes:

  • Mailing address

  • Contact information for the insurance company

  • Type of policy

  • Policy effective dates

  • Coverage limits

An additional insured on professional liability, or other people and companies on the policy

For example, a COI for a company with small business insurance might outline details of its general liability insurance and commercial auto insurance coverages.

After requesting a COI, you become a certificate holder and your name and contact information will be on the document. If you ask another business owner to provide you a COI, they’ll also have to notify you of any policy cancelations.

How Much Does a Certificate of Insurance Cost?

There’s no cost to get a certificate of insurance to show that you have insurance coverage. If you don’t have an insurance policy, you’ll need to contact us to purchase business insurance first. There’s no one-size-fits-all policy, so insurance costs vary. Your cost can depend on different factors and will be unique to your company.

Common Proof of Insurance Mistakes

One of the biggest mistakes you can make when hiring a third party is accepting a certificate of insurance that didn’t come from us, your insurance agent, or insurance company. Getting a COI from an insurance provider means you’ll see accurate information about their coverage details and limits.

It’s a good idea to get in the habit of asking for a COI every time you hire a third party, even if you worked with them before. Someone’s insurance coverage could have changed since the last time you worked with them.

How to Get a Certificate of Insurance

If your client requests a COI, you can get one from us. Some states may also let businesses use an electronic version or insurance ID cards to prove they have insurance. It’s a good idea to make sure you know what’s acceptable in your state.

Dan Zeiler

dan@zeiler.com

877-597-5900 x134

Liability Insurance, Contractors Insurance, Workers CompensationDan Zeiler