Does my Business Need an ACORD Certificate of Liability?

Acord certificate liability

Many small businesses who work with clients are asked for an ACORD certificate, but if you’re just starting out you may be unfamiliar with the term.

ACORD stands for the Association for Cooperative Operations Research and Development, they’re a non-profit that helps to set standards for the insurance industry.

An ACORD certificate of liability is a single-page document that shows evidence of your insurance coverage and the limit of your insurance policy. It gives a summary of the benefits and key elements contained in your policy, such as coverage types, insurance limits, policy numbers, effective and expiration dates.

As a business owner, having an ACORD certificate of liability gives your clients assurance that your business has the necessary insurance coverage, but in a much more concise manner than the actual policy document. Insurance companies provide ACORD certificate of insurance (COI) for various policies, depending on your industry and the job at hand, including:

  • Professional Liability insurance
  • Commercial Auto insurance
  • General Liability insurance
  • Workers' Compensation insurance
  • Business Owner’s Policy (BOP)
  • Errors And Omissions insurance
  • Umbrella Insurance

Do I need a certificate of liability insurance for my business?

As small business owners, a certificate of liability insurance is often a requirement of business transactions. This insurance certificate is essential if a client wants proof you have insurance coverage, more so in industries where work is regularly contracted out.

Also, most companies will require any businesses they hire or partner with to have their own liability insurance to avoid bearing the sole responsibility for any damages to their property or thrid-party injury. This document stands as proof when you’re signing a contract with a new client or leasing commercial property, that your business is protected, and is much easier to share with clients.

If you are conducting work on another’s property – say, for example, as a contractor – you’ll probably be asked to provide a COI. In fact, a COI is often necessary to win customers and contracts. Businesses who hire subcontractors often require COIs, with themselves named as an additional insured and minimum coverage limits, to make sure they are protected from any liability in the case of property damage, personal injury or other events.

Some examples of when your business might need to provide a COI include:

  • You own a construction company and have employees conducting work on client sites.
  • You operate vehicles or transport goods in your business. If you own a trucking company, for example, you may need to provide a COI to shippers or other entities.
  • You freelance in the “gig economy.”
  • You own an event company that hosts events at various venues. Each venue is likely to request a COI for each event you hold.

You can request a COI once your policy has been issued from your broker, or through CoverWallet’s insurance management platform. This platform allows you to track all policy documents online, as well as request and manage certificates of insurance.

What information can I find in my certificate of insurance (COI)?

You’ll find the following in your ACORD certificate of insurance:

  • Your name and address
  • Your policy number
  • Your policy limits
  • The name of your insurance agent and insurance company
  • The effective and expiration date of your policy
  • The types of insurance coverage you purchased

It’s important to note that a COI does not specify any terms of your contract with a business. It’s only a piece of paper providing proof that you have insurance, with basic policy information included.

Requesting certificates of insurance

While you might be asked to provide proof of insurance when hired for a job, as a business owner you could find yourself on the other side of the fence, requiring a COI from a contractor you plan to hire. As a best practice, a business should request a COI from a contractor for each job they perform – even if they have a personal relationship and believe the contractor is insured.

When requesting a COI from a contractor, you’ll typically send them the particular information that needs to be stated within the document (your business details, limits, etc). Then, once you’ve received the COI, you’ll want to look it over to make sure the information aligns with your expectations. Here are some things to look for:

  • Make sure the name listed as “insured” matches the name of the company you’re doing business with exactly.
  • Check that the coverage limits comply with any specified in your contract.
  • You should also double check the policy coverage dates to make sure they are current and will not expire during the project. If they will expire, you’ll need to request another COI at that point.
  • Some COIs are produced specifically for a certain job, and may list things like the name of your company as an additional insured. Double check these details to ensure they are correct.

If the nature of your business requires you to collect a high volume of COIs, tracking and managing this information yourself can become difficult. Tools such as CoverWallet can automate the process, ensuring you have COIs on hand for each project you hire contractors for, and that you’re notified if coverage is insufficient or the COI has expired. A COI mistake or oversight could be very costly in the end.

How do I get a certificate of insurance for my business?

With traditional insurance providers, it could take days or even weeks to receive your ACORD certificate. But, with CoverWallet, you can usually receive an ACORD certificate of insurance immediately. You can also request and manage your ACORD certificates all online.

Small business owners have a lot on their plate, but with CoverWallet you’ll have one less thing to worry about.


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