The Basics of a Certificate of Insurance

Posted by OwenLevi on January 19th, 2021

A certificate of insurance or COI is a one-page document issued by an insurance company. It can range from auto and home insurance companies to commercial policies and brokers.

This document validates the existence of your insurance policy with a specific company and gives you an outline of the conditions and aspects of your specific policy. For example, commercial insurance certificates will provide the policyholder's name, the effectivity date, the type of coverage, the policy limitations, and other important clauses inclusive of the policy.

Without this certificate, a contractor will have issues securing clients due to integrity and accountability issues. Most would want documentation or proof in the form of the COI for peace of mind.

Understanding the COI

Certificates of insurance are mainly used in circumstances where accountability and major losses are involved. Small-scale business owners usually use this document to protect against responsibility in certain situations like workplace accidents and injuries.

When you buy liability insurance, you will be issued with a COI. This is one way of attracting clients and employees because it adds security and peace of mind by showing that you’re covered for any damages or accidents. For business owners, this document outlines their investment and agreement with the insurance company.

Validation of Certificate of Insurance

Usually, if you are the client and need a certificate of insurance, you can get it directly from the insurance company. There is no need to contact and request it from the business owner or even the contractor.

You should confirm that the name of the insured on the certificate of insurance is the same as the contractor or company you are using.

As the client, you must be meticulous in checking the policy's coverage dates to make sure that it is still active. You should also request a new insurance certificate if the existing policy is nearing its stipulated expiration date.

What Kinds of Businesses Need a COI

All businesses that offer services or are exposed to risk and losses should always have a COI ready to be shown when needed. Some businesses even include this document during the bidding process.

Vendors, suppliers, and other business entities that request your services, whether for a paint job or a commercial website, may require a certificate of insurance as proof that you have commercial insuranceand thus can cover the costs of any liability claim.

Details of a Certificate of Insurance

A COI should specifically document the “insured”, referring to the policyholder. Either an individual or the company name should appear on the certificate as the holder being covered by the insurance.

Aside from the name, the policy holder's mailing address should be specified along with the operations being performed. The issuing insurance company's details should also be listed, including the agency's contact information.

If several insurance companies are involved, like a combination of commercial, auto and home insurance companies, all these should be individually listed.

Most importantly, policies and coverage should be outlined