What is a Certificate of Insurance?
A Certificate of Insurance—also referred to as a certificate of liability insurance, proof of insurance, insurance certificate, and often shortened to COI—is a simple document that lists important information regarding your business insurance that you can request from your insurance company:
- Your insurance carrier
- The named insured (you or your company)
- Policy number
- Effective date of the policy
- Term date of the policy
- Type of coverage (professional liability insurance, general liability insurance, etc.)
- The limits of the policy
- Deductibles and costs associated
Some also include the name of additional insureds (third parties) and hold harmless clauses.
NOTE: A COI contains different sections for each type of coverage with the issuing carrier including but not limited to: general liability insurance, commercial auto insurance, workers’ compensation coverage, cyber liability, etc.
Why You Might Need to Obtain a Certificate of Insurance
There are a variety of reasons you may need to obtain certificates of insurance. Most companies prefer to see an insurance certificate before working together so they know you are insured and their business is protected in case of an accident or mishap. Here are a few common reasons you may need to request a COI:
Construction projects: It may be required to provide proof of insurance or forward a copy of your business’s certificate of liability insurance to bid on a construction project.
Leasing equipment: Often, if a business or organization is leasing equipment it may need to provide a certificate of insurance to the company that provides the equipment or location.
Audit: If your business is audited, you will need to provide proof of insurance and a COI is the easiest way to comply with that request.
Who Needs a Certificate of Insurance
Any business where a third party's business, property, or technology can be put at risk needs to request a certificate of insurance when working with contractors and other businesses. Third parties want to make sure you are insured to protect their business. Here are a few examples in which certificates in insurance are often requested:
- If your business frequently hires subcontractors, you’ll need to request that they provide a COI.
- If you often bid on large construction projects you’ll be required to submit a COI with the bid.
- If you own a business where there could be any potential liability or loss to a requirement, proof of insurance is often requested and/or required.
We recommend requesting insurance certificates every time your insurance policy is renewed, updated, or changed in some way so you have a physical copy to prove coverage.
Are Certificates of Insurance Free?
Yes! A certificate of insurance should be provided completely free from your broker or insurance company. If you’re being charged a fee to obtain insurance certificates then it’s time to switch brokers.
How do You Obtain a Certificate of Insurance?
The easiest way to get your certificate of insurance is to contact the broker you purchased your insurance policy through. Before you do so, make sure you ask the company requesting the certificate if there is minimum insurance coverage needed:
Are they looking for a particular type of insurance coverage? Are their certain minimum policy requirements they require to submit a bid? Once you have that information, you can call your insurance provider or broker to verify your business insurance policy meets those requirements. If not, you will have to determine whether raising your limits and updating your insurance contract warrants moving forward in the process at all.
In some cases, if you are the client requesting the certificate, you can contact the insurance company directly to obtain the information. Make sure you obtain the name of the business, their operating address, and business Tax ID Number to obtain coverage information.
In addition, there are varying state laws regarding certificates of insurance. Some states prohibit adding an additional insured or third party to the policy. So regardless of what is issued by the agency or insurance company, statute law will be the deciding factor.
Verifying a Certificate of Insurance
If you’ve requested certificates of insurance from a certificate holder directly (and not from their insurance carrier) you need to make sure that it’s valid business insurance. Here are a few steps you can take to validate the COI:
- Carefully check the effective and expiration dates on the certificate
- Verify that the insured name lines up with the business name
- Make sure that the policy limits provide the necessary coverage
Lastly, we recommend contacting the broker or insurance company that issued the COI to verify that it is still valid and did not terminate prematurely.
Get a FREE Insurance Quote and COI
Many types of businesses or organizations have different levels of insurance needs. Usually, a business will maintain basic liability coverage, as well as insurance for loss against fire, theft, or other damage. A business with employees also must comply with state Workers' Compensation insurance requirements.
If you're in the market for business insurance—even basic general liability insurance—connect with one of our insurance agents to get a free and competitive insurance quote. Our insurance agent happily provide you the necessary certificate of insurance if you choose to move forward.