A certificate of insurance (COI) is a pivotal document issued by an insurance company or broker. It verifies the existence of an insurance policy and summarizes the key details and conditions of the policy. It usually lists the policyholder’s name, policy effective date, type of coverage, policy limits, and other crucial details.
Without a COI, companies or contractors may find it hard to secure clients, as most clients avoid assuming the risks and costs arising from any incidents caused by the contractor or provider.
Key Takeaways
- A certificate of insurance (COI) verifies an existing insurance policy issued by an insurance company or broker.
- Contractors and small business owners frequently require a COI to ensure protection against liabilities for workplace accidents or injuries.
- Always verify the policy coverage dates and limits on any COI received.
How Certificates of Insurance (COIs) Work
Certificates of insurance (COIs) become essential in scenarios where liability concerns and potential significant losses exist. A COI serves as proof of insurance coverage.
Small business owners and contractors maintain a COI to confirm their insurance covers liability for workplace accidents or injuries. Purchasing liability insurance typically includes the provision of a COI from the insurance company.
A business or contractor without a COI may struggle to win contracts. Clients often demand this assurance to avoid risk exposure from damages, injuries, or subpar work on the contractor’s part.
Clients hiring contractors or service providers should acquire a current copy of their COI and regularly update it.
Validating a Certificate of Insurance
Clients customarily request a COI directly from the insurance company to ensure authenticity. To verify, they should match the insured name on the certificate precisely with the contractor or company they consider.
Additionally, clients should check the policy coverage dates to confirm its validity throughout their contract. If the policy is due to expire before the job completion, requesting an updated COI is necessary.
The Essentials of a Certificate of Insurance
A COI outlines various liability coverages as general, auto, umbrella, and workers’ compensation. The term “insured” refers to the entity or individual covered by the policy. Alongside coverage levels, the certificate includes the policyholder’s name, mailing address, and the insured entity’s operational details.
The issuing insurance company’s address is listed, along with contact information for the specific insurance agent or agency representative. If multiple insurers are involved, all their names and contact details will be included.
A client requesting a COI becomes a certificate holder. The holder’s details are found in the bottom left of the COI, including obligatory issuance notifications regarding policy cancellations.
The certificate summaries encompass coverage distinctions within policies, such as general liability indicating its limit categories and application per claim or occurrence. Workers’ compensation coverage reflects statutory benefits, and employer’s liability insurance limits should be explicitly listed.
Acquiring a Certificate of Insurance
If you need a COI from a contractor or business, they should provide it via their insurance company or offer you direct contact information for verification. Be cautious when accepting COIs directly from vendors due to the potential risk of encountering fraudulent COIs.
Who Needs a Certificate of Insurance?
If you’re hiring an independent contractor or service provider, ensure they present a COI before commencing work. Contractors and businesses need COIs to demonstrate insurance coverage to clients.
Duration of a Certificate of Insurance
Keep COIs indefinitely because unforeseen problems related to completed jobs may arise. Having COI proof is crucial for addressing these issues effectively.
When to Request a Certificate of Insurance
Always request and obtain a COI before any work starts on your property. Ensure your contract includes specific insurance requirements verified by the COI to manage potential risks.
The Bottom Line
A Certificate of Insurance (COI) is essential across various scenarios. Clients typically request a COI from the insurance company to confirm suitable coverage. If you hire contractors, ensure you get a COI from their insurer, even for previously hired contractors, as insurance coverage can change.
Related Terms: insurance policy, liability insurance, workers’ compensation, liability, insurance broker.
