A certificate of insurance (also known as a COI) provides proof that you and your business have coverage. A COI can show proof of general liability insurance or any other type of insurance policy your business carries.
It’s often required by contractors and businesses you may want to work with, especially in situations where there is concern about liability and losses.
For small-business owners, a COI is evidence of liability protection for workplace accidents or injuries. If you’ve purchased liability insurance, it will usually include a COI.
A general liability certificate can be an important document because it can be used to show potential customers, employees, and government officials that you’re protected.
You can think of your COI as a summary of all the key facts related to your policy. If another company wants to hire your business as a subcontractor, they’ll likely want to see that you’re insured.
For example, if a customer is on the fence about hiring you for a big project, a COI can provide that extra push to show you’re committed to performing the work in a safe and effective manner.
The COI gives them the key [pieces of information they need: your policy number, the name of your agent, the types of coverage and coverage limits and the dates the policy is in effect.
If you happen to be bringing on subcontractors, getting a copy of their COI shows they have business insurance and you’ll be protected if an accident happens.
Along with making it easier to work with or as a subcontractor, a certificate of liability insurance could save you some unwanted attention and complications on the job. If you are hiring subcontractors, your insurance company may require that you have copies of their COIs.
In fact, your insurance company may even request copies as well. If you’re unable to provide them (or worse, you’re using uninsured subcontractors), you may find yourself looking at higher premiums or losing your coverage.
If you’re reviewing a COI from a potential subcontractor, it’s important to make sure the information is accurate and the policy is valid. Here are some things to look for:
Coverage dates: Make sure the policy hasn’t expired and will be in effect throughout the time you'll be using the subcontractor.
Check the type of form: The coi should be printed on an Acord 25 form. Check the lower left-hand corner of the COI. It should say “Acord 25.”
Verify the insurance company: You can usually find the company name in the top right-hand corner. If you don’t recognize the insurer’s name, you can get more information about the company at www.ambest.com. They provide ratings and analysis for many insurance companies.
Does the document look altered: As you’re looking over the coverage and dates, make sure the type fonts match and are aligned. Also make sure there is no handwritten information.
Check for generic forms: One way to judge the authenticity of the COI is to look for signs it may have not been created by the insurer. If the rectangle in the bottom right corner is blank or says “CLEAR ALL,” the COI may have been fraudulently created.
Call the insurer: They should be able to verify all the information on the COI. You can even ask them to send you a copy.
We get it. Insurance documents written in insurance language can often be a bit difficult to decipher and understand. Here are some explanations that can help:
The insured: This is the person or company that is being covered by the policy. The name of the individual or the business should be listed on the certificate.
Types of coverage: There are separate sections for each type of coverage provided by the insurer. They can include general liability, workers compensation, umbrella coverage and others.
Coverage limits: Each type of coverage should provide information about any limits of the coverage as well as whether it applies per occurrence or during the coverage period of the policy.
You may see no limit under workers compensation coverage. That’s because these are often determined by individual state laws. However, an employer’s liability coverage limits should be listed.
Names and addresses: Along with the name and mailing address of the policy holder, the COI also includes the address of the insurance company. In addition there also may be a name and contact information for someone at the insurance company.
Additional insured: This is a person or company who is not listed on the original policy, but will now be covered. If you’re working as a subcontractor, you may be asked to include the name of the contractor as an additional insured.
This is generally done to provide extra protection for the company hiring the subcontractor, and it only grants them access to your policy limits for the work specified in your contract.
If you’re working with a large company, including them as an additional insured on your policy can often be a requirement of the job and specified in a contract.
Waiver of subrogation: When a person or company is granted a waiver of subrogation on your COI, it means your insurance company cannot try to recover losses from a claim.
For instance, a claim is filed against your business while you were working for a contractor. Your insurance company pays the claim filed against your business, but they can’t try to recover that money from the contractor because they were given a waiver of subrogation.
Notice of cancellation: This means the person or company listed (such as the contractor) will be notified if your insurance coverage is cancelled for some reason.
Depending on the insurance provider you select, your COI might be automatically delivered to you. Otherwise, you may need to request your COI from your policyholder.
If you need your Certificate of Insurance, we can help here, and get you a copy of your COI in less than 24 hours.
While a COI is basically a summary of your insurance coverage, it can seem like there’s a lot of information to be aware of. Here are four key points about COIs to keep in mind:
It’s the insurance version of TL/DR. It serves as proof of insurance, without the need to wade through an entire policy document.
Most likely, your job is not in the insurance business. Whether you’re looking for insurance information for a subcontractor you’d like to hire, or whether you’re being asked for it, a COI can save time. And that’s important for just about any project.
Having COIs from all your vendors and subcontractors can help financially protect your business if the unexpected happens and you’re facing a claim.
Asking for a COI is standard practice for many companies and contractors you may work with. Business owners without insurance (and the accompanying COI) can be risking their financial health. And by doing so, they also may be risking their chance to secure contracts and business.
While insurance is often a business necessity, the ins and outs of it may not always be that easy to figure out. That’s why we believe it’s just as important for us to help you understand your coverage as it is to provide it.
You can find some very practical information about small business insurance in our online resource center, Simply U.
We focus on topics that are often top of mind for small business owners. And we share information in a way that’s easy to grasp and enjoyable to read.
If you’d like to know a bit more about business insurance in general, here are a few articles to get you started:
5 Signs You Need to Get Small Business Insurance
The Top 10 Dos and Don’ts of Buying Business Insurance
How to Choose Your Best Small Business Insurance Policy
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.