A certificate of insurance (COI) is an insurance document proving you or your business has a specific level of coverage from an insurance company.
While some businesses may never need a certificate of insurance, others may regularly have to prove they have insurance for vendors, customers, landlords, and other business partners. Here’s a closer look at what a certificate of insurance is and how one may be helpful for your business.
What is a certificate of insurance?
A certificate of insurance is a document that proves you have insurance, usually liability insurance. You may not receive a certificate of insurance automatically, but most insurance companies offer them to customers at no additional cost. Different types of liability insurance, like general, auto, umbrella, and workers' compensation, are listed separately or on their own certificates.
A COI generally includes this information:
- Name of insured business or individual
- Policy type and basic coverage information
- Insurance coverage limits
- Policy dates
- Any additional insured parties on the policy
- Insurance company contact information
A certificate of insurance is a summary of your insurance policy that’s also proof of insurance. If you’re looking for a COI, it’s best to get one directly from the insurer rather than the contractor or business to ensure it’s legitimate. A certificate of insurance should fit on a single page.
Why do you need a certificate of insurance?
When you work in an industry with liability risks, which is very common, it’s wise to buy business insurance to protect your company from legal liabilities. Even when something doesn’t seem like your fault, it’s possible to end up on the wrong side of a lawsuit. That’s when business owner insurance policies, such as general liability or errors and omissions insurance, kick in with financial protection for you and your business.
For example, contractors work on client projects where it’s possible to accidentally install a defective item or make an error when working. If the client is upset or, even worse, injured due to the contractor’s work, there’s a good chance the client (or their insurance company) will seek reimbursement and possibly more. Liability insurance policies can protect businesses from this type of scenario.
When working with a subcontractor, the general contractor might request a certificate of insurance to prove you are insured. That way, they know they have a layer of protection if the subcontractor does subpar work or doesn’t live up to their end of the contract.
Landlords are another common requestor of certificates of insurance. While the landlord’s insurance may cover the physical building, they will likely want proof that you have liability insurance if a customer is injured while visiting your business.
There are many more situations where you may need a certificate of insurance. Lucky for business owners, they’re relatively easy to get, and there’s no cost involved.
How much does a certificate of insurance cost?
A certificate of insurance doesn’t cost anything. When someone buys a liability insurance policy, a certificate of insurance is available at no additional charge. Even if you’re a busy business working with many customers or clients who need a copy of your certificate, you can get as many as you want for free.
The cost of liability insurance varies depending on several factors, including the size and risks of your business. You can get an insurance quote online or work with a trusted agent to quickly and easily find a policy that makes sense for your unique needs.
How to get a certificate of insurance?
You can get a certificate of insurance online through your insurance company’s website in many cases. If you have an insurance agent, you can also call or email your agent, and they can put the certificate of insurance request in motion.
Suppose a customer or client wants to get your certificate of insurance directly from the insurer. In that case, there’s typically an online form or a toll-free phone available to submit a request.
Now you know the essential details about certificates of insurance. If you need one, contact your insurance company today. If you’re uninsured, it may be time to reach out to your agent or insurer to get the best liability insurance for your business needs.