A certificate of insurance contains important policy information in a single, easy-to-read document, such as the policyholder’s name, policy number, coverage limits and deductibles, effective date, and more, depending on the associated policy type.
A COI is not required for all insurance policies; they are most common with certain types of business insurance and auto insurance (also known as auto ID cards).
What is a Certificate of Insurance (COI)?
A certificate of insurance (COI) is a document that an insurance company or broker issues. The COI confirms the existence of an insurance policy and summarizes its key features and terms.
A standard COI, for example, includes the policyholder’s name, the policy’s effective date, the type of coverage, policy limits, and other important policy details.
Without a COI, a company or contractor will have difficulty securing clients because they will likely be unwilling to assume the risk of any costs that the contractor or provider may incur.
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How Certificates of Insurance (COI) Work
Certificates of insurance (COIs) are used in situations where liability and significant losses are a concern and a COI is required, which is the case in the majority of business contexts.A certificate of insurance is a document that proves insurance coverage.
Small business owners and contractors frequently have a COI that proves they have liability insurance for workplace accidents or injuries.
The insurance company will usually provide an insurance certificate when you purchase liability insurance. Without a COI, a business owner or contractor may struggle to win contracts.
Because many businesses and individuals hire contractors, the client wants to know that a business owner or contractor has liability insurance so that they will not be held liable if the contractor is responsible for damage, injury, or poor workmanship.
When a company hires a contractor or another entity for services, they should obtain a copy of their COI and make sure it is current.
Validating a Certificate of Insurance
A client will typically request a certificate from the insurance company rather than the business owner or contractor.
The client should double-check that the name of the insured on the certificate matches the company or contractor they are considering.
In addition, the client should check the policy coverage dates to ensure that the policy’s effective date is current. If the policy is set to expire before the contracted work is completed, the client should obtain a new certificate.
Details of a Certificate of Insurance
General, auto, umbrella, and workers’ compensation liability coverage are all listed separately on certificates of insurance.
The term “insured” refers to the policyholder, person, or company listed on the certificate as being insured.
In addition to the coverage levels, the certificate includes the policyholder’s name, mailing address, and a description of the operations performed by the insured.
The address of the issuing insurance company is listed, as well as contact information for the insurance agent or contact person at the insurance agency.
If more than one insurance company is involved, all names and contact information are provided. A client becomes a certificate holder when they request a COI.
In the bottom left-hand corner, the client’s name and contact information appear, along with statements indicating the insurer’s obligation to notify the client of policy cancellations.
The certificate summarizes the insured’s policies and the coverage limits provided for each type of coverage.
The general liability section, for example, summarizes the six limits offered by the policy by category and indicates whether coverage applies per claim or per occurrence.
Workers’ compensation coverage will have no limit because state laws govern the benefits provided to injured workers. However, the limits of an employer’s liability coverage should be listed.
How to Get a Certificate of Insurance
If you ask a contractor or business for a COI, they should be able to retrieve it from their insurance company or provide you with their insurance company’s contact information so you can request that proof be sent to you directly.
However, be cautious if you request a COI from your vendor. Contractors have been caught submitting false COIs in the past.
Who Needs a Certificate of Insurance (COI)?
Simply put, if you hire an independent contractor or a business to work on your property, you should insist on a certificate of insurance (COI).
If you are a contractor or a business, you should have a certificate of insurance (COI) to show your clients that you are insured.
How Long is a Certificate of Insurance Good For?
It is best to keep any COI you receive indefinitely because you never know when a problem may arise for a job completed on your premises or for someone else.
Keeping proof of the COI will aid in resolving any issues that arise.
When Should I Get a Certificate of Insurance?
Before anyone works on your home or property, you should request and receive a COI. If you have a written contract, it should include insurance requirements, such as coverage and limits, which should be verified with a COI.
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The Bottom Line
A Certificate of Insurance (COI) may be required in a variety of situations. A client will typically request a COI directly from your insurance company to confirm you have adequate insurance coverage.
If you are hiring a contractor, consider obtaining a certificate of insurance from their insurance company, even if you have previously worked with them, because their coverage may have changed.
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