Certificate of Insurance (COI) for Small Businesses

What Types of COIs Are There?

You can get COIs for many types of policies, including these:

• General liability: A general liability COI shows that you have protection against third-party claims for bodily injury and property damage.
• Professional liability: A professional liability insurance COI can provide clients with the details of your coverage against mistakes related to your advice and services.
• Business owner’s policy (BOP): A certificate of BOP insurance shows that your business has both general liability and property insurance coverages.

Why Your Small Business Needs a COI

• Securing contracts and clients: Many clients require a COI before signing contracts to ensure they are not liable for your actions or potential accidents.
• Building trust and credibility: Providing a COI proves you are a responsible, professional business with proper coverage in place, which can help win more projects.
• Meeting lease or vendor requirements: Landlords, event venues, and general contractors often require proof of insurance before allowing you to operate on their premises.
• Acquiring financing: Many lenders require proof of insurance during the loan application process.
• Legal and Licensing Compliance: Certain industries or government contracts necessitate a COI to comply with regulations, and some professional licenses require proof of insurance. 

What’s Included in My Insurance Certificate?

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, professional liability 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.

Common Mistakes To Avoid With Certificates of Insurance

If you work with vendors and subcontractors, you should verify the following details when reviewing their COIs:

Coverage period: Always check the expiration date. An expired policy is the same as no policy at all.

Additional Insured status: If you aren’t named or included as an additional insured, the vendor’s policy might not cover you if you get sued for their mistake.

Coverage limits: Ensure their policy limits actually meet the requirements of your specific contract or project.

Waiver of subrogation: Without this, a vendor’s insurance company could potentially sue you to recover costs they paid out for a claim, even if the vendor was at fault.

Form completeness: Incomplete or incorrect forms (like a misspelled business name) can render a COI invalid when you need it most.