Certificate of Insurance

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What is a Certificate of Insurance (COI)?

Every company needs a robust financial protection plan to ensure the utmost business stability. Regardless of size and trade, insurance coverage offers dependable security against loss or damages incurred from legal claims, natural calamities, accidents and medical emergencies.

For many entrepreneurs, getting the right protection for their business is deemed to be critical. Proving that your business carries insurance is important to establish the fact that your trade is protected from certain liabilities and challenging risks. And one way to ascertain this is by showing the Certificate of Insurance.

Defined as a non-negotiable document issued by an insurance company or insurance agent, Certificate of Insurance serves as a proof of coverage. This piece of paper verifies the existence of your policy along with key aspects, conditions and plan limitations. It is often required by companies and clients to ensure enough coverage is in place should an accident or injury happen in the workplace.

Certificate of Insurance or COI can sometimes be called “ACORD Certificates.” ACORD stands for Association for Cooperative Operations Research and Development which is a non-profit organization that pioneered the standardization of insurance forms.

Bear in mind that although they might sound the same, Certificate of Insurance differs from your insurance policy – with COI being a brief summary of the latter.

What are the benefits of a Certificate of Insurance?

Certificates of Insurance carries a lot of benefits if you are a small or mid-sized business owner. For one, it serves as a reassurance that if anything goes wrong, your business has the financial capacity to face liabilities and obligations. COI equally works as a protective barrier for you and your client. It minimizes, if not eliminates; costly expenses brought about by various instances where claims could lead to a financial disaster. This proof of insurance validates that you have the means and resources to compensate liability claims.

Although business is a big gamble, most companies and contractors don’t like taking chances on uncertain things, and they will only choose to work with businesses backed up by strong financial support. In the case of small-sized companies, not everyone is protected by insurance. Thus, having a certificate to prove your policy gives you an edge over competitors increasing your chances to win contracts and close agreements before anyone else.

Another huge advantage of having a COI is its wide acceptability regardless of trade and industry. Business Insurance is not specific to a certain commerce; it extends to multiple markets as long as there is a risk of liability involved. Locally within the US or internationally, Certificate of Insurance is recognized in all parts of the world.

When will I need a Certificate of Insurance?

There are many instances where having a COI readily available on hand could potentially land great opportunities for your business.

  1. Secure high-value jobs: If your business is in the line of construction, many high-value projects will require a Certificate of Insurance from all companies before they are allowed to bid on the project. Having a COI will increase your chances of getting the assignment.
  2. Win contracts and agreements: Breach of contract is a common dilemma for most business owners. Should you have a COI available, this serves as evidence that you have the full capacity to compensate them in case something goes wrong.
  3. Keep your customers at ease: Accidents in the workplace do happen, and by showing your customers that your business is armed with liability insurance, it gives them the peace of mind knowing that they too are protected.
  4. Avoid legal fines and penalties: Each state requires business owners a different set of policies before they can operate legally within the area. Having a COI proves that you have successfully completed mandated requirements, saving yourself from legal responsibilities.
  5. Expand business collaborations: Working together with other businesses comes with risks and responsibilities. Should you have the certificate for a specific type of policy, your assets are protected even if you choose to do business with other companies.

How to navigate through a Certificate of Insurance form?

Generally, the Certificate of Insurance should contain basic details about your policy such as the policyholder’s name, type of coverage, effective date, conditions and policy limits. It should also include the agent who issued the certificate, policy numbers, key points as well as cancellation details.

Your proof of insurance certificate should contain separate sections describing each type of liability coverage. It can be listed as general, umbrella, auto or workers’ compensation depending on your policy. Information about the issuing body should likewise be present such as the address of the company along with the contact information of the agent or company representative. In case of several providers, all names and contact details should appear on the certificate.

Although everything that is listed on the Certificate of Insurance is essential, there are three major things you need to examine closely:

  • The name of the insured should match the company or contractor.
  • The insurance coverage date should be within effective periods.
  • The type of policy whether per claim or occurrence basis.

Lastly, when someone requests a Certificate of Insurance, they automatically become a certificate holder. Their name and contact information appear on the bottom left corner of the page.

Still not sure what you need?

Head on over to CoverWallet’s Insurance Checklist. There you’ll find a list of insurance types needed for your industry.

How is a Certificate of Insurance issued?

The process of issuing a Certificate of Insurance is easy, and most insurance companies will provide you a copy along with your policy and other related documents. In case you don’t have one or would just like to have a copy for backup purposes, all you need to do is to request a certificate from your carrier as they are the ones legally responsible for providing insurance documents. Keep in mind that your proof of insurance should only come from the issuing agency, and not from other sources.

Certificate of Insurance can either be a physical document or in the form of an electronic file. Regardless of file type, both should serve their purpose as long as pertinent details are present. Though, if you want a portable copy of your certificate that you can bring anywhere, requesting a PDF version of the file would yield utmost convenience.

Another way to obtain it is through online platforms. By granting you direct portal access 24/7, you don’t have to wait and call the insurance office following their availability; you can have the certificate whenever and wherever you need it. Practical and efficient, a simple click and tick are all you need to obtain your proof of insurance.

What does additional insured mean?

Most of the time, clients often request small business owners to add them to the Certificate of Insurance as “additional insured.” If this happens, don’t be alarmed because complying with this request doesn’t give them any legal rights under the certificate. It only means that the client’s name and address are listed on the proof of insurance since they are not initially named right from the beginning of the policy.

The primary purpose of this is to provide coverage for the additional parties in case something goes wrong. It protects the business from any legal claims should an incident happen within the effective dates. Parties listed as additional insured are not permitted to modify existing coverage and limits, but they are allowed to make direct insurance claims to the policyholder’s company. Listing prospective clients or contractors as additional insured to your Certificate of Insurance will only take effect after an endorsement and approval have been made.

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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