When you run a business, there are a lot of to-do's to cross off your list. You may hear that you need to check off getting a certificate of insurance (“COI”). But why may you need one?
In this article, we'll answer questions like, "What is a COI?"; "Why do I need a COI?"; "How much does a COI cost?"; and more.
Read on to learn more about how a certificate of insurance can help protect your business.
A certificate of insurance is a document that details your insurance policy and also is referred to as a COI. The document verifies that the policy is active and typically contains information such as:
As a business owner, you are considered the policyholder. It’s a little different if a vendor or customer requests a certificate of insurance from your insurance provider. In these cases, they are called the certificate holders.
A certificate of insurance typically can be provided by your insurance carrier. You can get it either by an email or a downloadable file on your account. Keeping your COI easily accessible is important so that you have it whenever a customer asks for proof of insurance coverage.
A COI is not the same as a business license. To learn more about what a business license is and how having one can help your company, read more here.
The answer to this question isn't merely, "because it helps to have one." In fact, there are at least 9 reasons why you may need a certificate of insurance. We'll discuss each below.
If you have insurance coverage, then it makes sense to have a certificate of insurance. This way you have documentation of your policy and its limits. You can keep your proof of coverage on hand either digitally or on hard copy.
We'll talk more about how to get your certificate of insurance later on. But if you have business insurance coverage and can't prove it, it's time to get a COI.
Deciding on your business's legal structure is an exciting big step. When starting out, you may decide to stick to being a sole proprietorship. This means that you likely file your business and individual personal income tax returns together.
As your business grows, you may decide it's time to incorporate as an LLC, a corporation, or another type of entity. In this case, you're taking an exciting step, but with that excitement can come added risk for your business.
When you're deciding on your company's business structure, having a COI can help put your mind at ease. It's proof that you have a policy that can help with unforeseen incidents like bodily injury, negligence, and more.
Bringing on a new vendor or customer means more opportunity for your business. Sometimes a customer or vendor will ask to see proof of insurance coverage.
In cases like these, it helps to have a certificate of liability insurance. It shows you took the necessary steps to financially protect your work in case of an unforeseen incident.
Oftentimes, certain vendors will require you to have a COI. That's because they want assurance that certain potential liabilities will be your responsibility — not theirs.
Say you're talking to a potential customer. They're interested in working with you, but they may be hesitant. After all, they haven't worked with you before and don't know what to expect. What if something goes wrong and the investment they make is spent in vain?
Having a certificate of insurance can help you win new customers. With your COI, you can show potential customers proof of coverage. You also can explain how your policy protects against certain financial risks.
That way, your customers will see that liability issues are your responsibility. If an incident occurs, you're typically covered up to your policy's limit.
As a small business owner, joining certain organizations can give you an advantage. They open up doors to opportunities that are otherwise inaccessible to you.
In some cases, they may introduce you to vendors or even alert you to new work and project opportunities.
Oftentimes, you're required to show a certificate of liability insurance before joining certain associations. An organization wants to know that in the case of incidents like third-party property damage, bodily injury, copyright infringement, or more, you're protected.
Each COI will show that you're protected against different types of occurrences. The type of protection and limits depend on your specific policy.
Similar to organizations and vendors, landlords want to know that your business is insured. Before renting a space to you, landlords and property owners will often ask to see a COI.
With a certificate of insurance, they can see that your business is financially protected against certain liabilities.
It also helps protect your landlord. In case of an incident, a COI shows that your policy can help to cover claims and legal fees, meaning the landlord likely won't be liable depending on the incident.
Business owners are resilient — and we can get a lot done on our own. But there also comes a time when we need to ask for financial assistance. If you plan to apply for a grant or loan, then be prepared to show your certificate of insurance.
When an organization approves a grant or loan, they make a big investment in your business. But what if something goes wrong?
Let's consider an example. They grant you money, but there's an unexpected incident. As a result, your business is at fault for third-party property damage.
Without an insurance policy, you may have to pay out-of-pocket for repairs. And it's likely that the organization's investment would go to waste.
With a COI, though, it likely would look different. An organization can see that you took the step to make sure you're financially protected. That's because they know that you have coverage to help with claim costs and legal fees up to your policy's limit.
That means they're less likely to be liable and that their investment isn’t jeopardized.
As owners of a business, we know what makes working with us special. But it isn't always obvious to customers. Especially when choosing between businesses that provide similar services, it's hard to tell. Which is best? Many may be focused solely on the cost of a project.
But there's so much more that goes into the work we do for customers. And unfortunately, there's risk there, too.
Showing a certificate of insurance can help give you a competitive edge. Customers want to know you're prepared for the unexpected.
If you show your COI, customers will see that you have coverage in case something unexpected happens. That way, the money they're spending on the project won't go to waste in the event of an accident. Instead, if something were to happen, your policy could help to cover the claim costs and legal fees (up to your policy limits).
Having business insurance is a great selling point for your business. What better way to show that you're covered than to display your COI?
If you want customers to know you have a policy, you can display your COI at an in-store location or on your website.
Getting a certificate of liability insurance can be easy, fast, and affordable. Follow the steps below to get your COI:
Before you get an insurance policy, you need to know which risks your business faces. Make a list of all the potential incidents that could occur. This will help you get a policy with the right amount of coverage for your business.
Business insurance policies are typically paid for with annual or monthly premiums. It's wise to understand your cash flow and how much money your business is likely to earn and spend each month.
You can learn more about calculating your cash flow here.
Next, it's time to see what options are available to you.
With Simply Business, we make it easy. Use our free quote comparison tool here to see policies that may be right for your business.
Fortunately, you'll see that options are easy to compare and typically affordable. In fact, our general liability policies start at $21.25/month.*
When receiving your options, consider the policy limitations per occurrence and claim.
After you buy a business insurance policy, it's time to get your certificate of liability insurance. This is your chance to prove that you took the time to research and buy coverage for your business.
You can go about getting your COI in several different ways. First, log on to your customer account and download your policy onto your device.
You also can call a Simply Business licensed insurance agent at 844-654-7272 and request a certificate of insurance for your policy to be sent to you.
As a business owner, every item you purchase matters and can impact your bottom line. And a business insurance policy is no exception.
Remember, a certificate of insurance is a document that pairs with a policy. So while an insurance policy costs money, there is no additional cost for a COI.
A certificate of liability insurance is included when you buy an insurance policy. The cost of an insurance policy varies, depending on a variety of factors, such as:
Have questions about changing your policy and the COI that goes along with it? Call the number above to speak with a licensed insurance agent.
At the beginning of this article, you may have wondered: "Why do I need a certificate of insurance for my business?"
Well, hopefully, now you know! We reviewed nine reasons why having a COI benefits you as a business owner.
Curious to learn more about how to protect and grow your business? Check out Simply U, our blog for business owners.
*Monthly payment calculations (i) do not include initial premium down payment and (ii) may vary by state, insurance provider, and nature of your business. Averages based on July-September 2023 data of 10% of our total policies sold.
I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).
Allison writes on a number of topics such as small business leadership, business structures, and employee training.
This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer
*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.