24 February 2022
If you’re a small business owner, chances are you have a sizable stack of important business documents. A certificate of insurance should be in that pile. If not, it’s time to get one.
Sooner or later, a customer or client will ask you to provide a certificate of insurance — also known as a COI or a certificate of liability insurance.
Don’t assume you already have a COI in your files. Even if you have an active insurance policy, you may need to request your certificate of insurance, which involves a few steps.
We’re here to explain what a certificate of insurance is and how to get one.
Let’s begin with what it isn’t.
A certificate of insurance is not an insurance policy. It’s proof that your small business has insurance.
Your insurance provides coverage that protects your business from loss. A COI is evidence that you have a policy — or “proof of coverage.”
Bear in mind that you can’t obtain a certificate of insurance without an active insurance policy.
A COI is usually a one-page document that highlights the most important details of your plan, including:
A certificate of liability insurance offers a snapshot of the coverage you carry without getting into the detailed coverage of your policy. Think of a COI as an insurance ID card that you can present at any time.
As a small business owner, you should keep a certificate of insurance accessible so you can present it whenever a customer asks for proof of insurance coverage.
These are the most common business activities where you’ll need one:
Bidding on a job
No one wants to hire a business or contractor that doesn’t have business insurance. That’s why many companies and individuals request a COI during the bidding process. They’ll want to know that you’re running a professional operation with sufficient insurance coverage.
Signing a contract
If you’re signing a contract and you haven’t been asked to provide a COI, you may likely be asked for it. Many businesses entering into a contract or service agreement with another party will want to see a certificate of liability insurance before any work begins.
Obtaining a license
Many states require you to have professional liability insurance when applying for certain professional business licenses. Showing a licensing board a certificate of liability insurance establishes credibility and trust in your business.
Renting a space
Say you’re planning to rent or lease a business space or some equipment. You will likely need to prove that your business is financially protected against certain liabilities.
A certificate of liability insurance is an important and helpful document, so anyone who requests it will likely take the time to review it thoroughly.
Here’s what they are checking for:
You never know when a new customer may question the authenticity of your COI, so they may contact your insurance company directly to double-check the information.
Put simply: You may need a COI as proof that you carry liability insurance.
Any small business that provides a service or performs work with a potential for high liability loss could be asked to show a certificate of insurance. A COI makes it easy for you to show potential business partners, clients, landlords, and others that you’re protected.
Read on for more reasons why you need a COI:
If you have an active insurance policy, obtaining a COI is the icing on the cake. It’s proof that you took the necessary steps to protect your work in the event of an unforeseen incident.
You can display your certificate of liability insurance on your website or at your office location. It’s a great way to show that your business is insured.
Let’s face it; no one wants to spend time reading your multi-paged insurance contract. A COI is a convenient, concise document that simplifies the process of insurance verification.
With a COI in hand, you limit the back and forth with clients and customers, making it easier to finalize a business agreement. And it could save you hours of time each month.
When a potential customer asks for a certificate of insurance, you don’t want to be caught off guard. A hesitant response may raise doubts about your experience and how you run your company.
One way to increase credibility is by sharing a certificate of liability insurance. It shows you have the necessary coverage to protect your business and the people it serves. And that goes a long way in building trust with customers and vendors.
Any time you work for a new customer, they will want to know about your insurance status. If you damage their property or cause them bodily injury, they want assurance that you will take financial responsibility for any damages.
A certificate of insurance provides them with all they need to determine if your policy coverage matches the work requirements. If it doesn’t, they may ask you to add coverage.
It's always better to stay one step ahead of your customers’ requests. Having quick access to a COI looks professional and demonstrates that your business is well-run. You never know who will request a certificate of insurance or how often you’ll be asked, so keep a COI handy at all times.
A certificate of liability insurance is easy to request. Just follow these steps:
Before contacting your insurance company, you may want to ask the person requesting the COI for its minimum coverage requirements. Ask for a description of the liability coverages and limits your company must have before beginning any work.
Once you know the minimum coverage requirements, call your insurance company and request to review your policy and make an assessment. If your current policy doesn’t satisfy the requirements, work with your insurance provider to add the necessary coverage. While this will take more time, it ensures that you are appropriately covered.
The final step is obtaining the certificate of insurance, which you can usually request through your insurer’s online portal or by calling your provider, who will create the certificate and send it to you within a few days. It’s also a good idea to download a digital copy.
You may wonder how certificates of insurance benefit you. As a business owner, you want to protect your company from potential risk and loss on the job. That’s why it’s important for you to request a certificate of liability insurance from your vendors.
Let’s say you own a construction company that hires subcontractors to do some of the work. You’ll need to request proof of insurance from each of them. If your subcontractor makes a mistake that results in costly property damage or injuries, you could be sued if they don’t have insurance coverage.
Good news! Your certificate of insurance is part of your insurance plan and is usually free.
However, some insurers charge a small fee for a COI. If you’re charged a fee for a COI on an existing policy, you may want to consider challenging it, since some states don't allow fees for certificates of insurance.
When you get insurance through Simply Business, we provide a certificate of insurance at no extra cost, and you can use it immediately as proof to your clients and employees that you're protected.
Wondering what kind of liability insurance is right for you? At Simply Business, we can customize your insurance to the exact needs of your business. Use our free quote comparison tool to see what options are available to you.
Two common types of liability insurance are general liability insurance and professional liability insurance.
General liability insurance can provide your business with coverage against a claim resulting from third-party property damage, accidents, and bodily injury.
With GL protection, you won’t have to worry about putting your business at risk, as this type of insurance usually covers:
Incidents like these could result in financially devastating claims, costing you thousands of dollars. In fact, the average claim for property damage or customer injury is a hefty $30,000.
With GL insurance, your policy can cover the costs of a claim — including any resulting legal fees — up to your policy limit.
Negligence can happen, even when you think you’ve done everything right. Professional liability coverage may be right for you if you offer professional services such as accounting, graphic design, or real estate.
Professional liability coverage means that if a client sues you for negligence, you, your business, and maybe even your family’s finances won’t be affected by any resulting lawsuits and claims.
Professional liability insurance typically covers:
If you have employees, your small business will likely need workers compensation insurance. Carrying workers comp can provide much-needed security, as having this coverage typically prevents an employee from suing your company.
Workers comp typically covers:
At Simply Business, we work with many of the nation’s top insurers, so we can find affordable coverage to fit your budget. That includes general liability policies as low as $25.95 per month.*
Get an affordable & customized policy in just minutes. So you can get back to what matters: Your business.Start Here >
When you’re running a small business, you have a lot of items on your to-do list. Why not check off the task of getting your certificate of liability insurance? Getting a COI is easy, fast, and free — and the next time someone asks if you have one, you can say yes.
* 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 January-December 2020 data of 10% of our total policies sold.
I've always loved to write and have been lucky enough to make a career out of it. After many years in the corporate advertising world, I'm now a freelance writer—running my own show and contributing to Simply Business. Fun fact: I have three desks in my house, but I still do my best thinking walking in the woods
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
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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.