If your company rents property from another company or does work for another company, the owner of the property or the company that hired your company may request a certificate proving that your company carries liability insurance (COI). A certificate of insurance (COI), which is analogous to a driver's license for auto insurance, is used to establish that your company is fully protected against claims made by third parties. Because COIs are used in a wide variety of everyday business activities, it is important for owners of businesses to be familiar with what COIs are, why they are used, and how to obtain one.
Key Takeaways
- As evidence that you are covered by liability insurance, a certificate of liability insurance, often known as a COI, will provide a summary of your liability policies.
- A certificate of insurance (COI) is not the same thing as an insurance policy and does not offer any coverage.
- Before you are allowed to begin any work or lease any property, you could be required to present a certificate of insurance first.
- Contacting your insurance agent or provider and submitting a written explanation of the minimum coverage criteria are the two steps necessary to obtain a certificate of insurance (COI).
What Exactly Is a Certificate of Insurance for Liability?
A certificate of liability insurance, often known as a COI, is a document that provides an overview of the liability insurance coverage held by your business. It acts as confirmation that your company has obtained liability insurance of some kind, whether it be a general liability, car liability, or another sort of liability insurance. This paper does not give a comprehensive coverage analysis but rather offers an overall summary of your liability policies. A certificate of insurance is primarily concerned with liability protections; nonetheless, it is neither an insurance policy nor does it offer any protection of its own. Instead, it highlights important characteristics of your policies, such as the effective dates of your policies, their policy numbers, and the limits of their liability coverage. There are a variety of variants of the COI that are utilized for property insurance as well as other types of insurance, such as automobile and liability. Your company is safeguarded against claims brought forth by third parties for bodily injury, property damage, personal injury, and advertising injury when it possesses general liability insurance.In What Circumstances Is an Insurance Certificate Required?
If your firm is leasing a new facility or piece of equipment, or if it is trying to get employed by another company to conduct work or offer a service, you will almost certainly require a certificate of insurance. Before beginning any work or signing a lease, the firm that is hiring you could first want to see a certificate proving that you are qualified for the job. Because of this, you should contact your insurance agent or provider as soon as you realize you'll need a certificate and ask for one to be mailed to you.What Kind of Information Is Contained in an Insurance Certificate?
The Association for Cooperative Operations Research and Development (ACORD) is a not-for-profit research organization serving the worldwide insurance business. Many insurance companies provide certificates of insurance on standard forms produced by ACORD. Others make use of templates that they have created on their own. Regardless of the form that is utilized, a certificate of insurance (COI) gives an overview of the commercial liability insurance held by your organization. Typically, it contains the following pieces of information:- The name and address of the producer (An "agent" or "broker" is what the industry calls a "producer.")
- The name, location, and contact information of your organization
- A listing of insurance companies who are willing to cover your company
- Specifics regarding your organization's liability coverage, which may comprise workers' compensation, general liability, car liability, and/or umbrella liability, among other options. Include the policy numbers, effective dates, and the maximum payout that can be expected from each policy.
- A description of the operations, locations, and vehicles utilized by your firm (if applicable)
- The name and address of the person who holds the certificate (the business that requested the certificate)
- Signature of an individual who has been given permission by the insurance company to approve certificates of insurance
How to Obtain a Certificate of Insurance for Your Company
There are a few critical stages that must be completed in order for your company to be issued a COI. Obtain the information that is required: The first thing you need to do in order to acquire a COI is to inquire about the minimum coverage criteria demanded by the company that will be doing the hiring. Asking the company for a written statement of the liability coverages and limits that your business must have in order to be considered for the job or to lease the property is the essence of what this entails. In order to issue the COI, your agent or insurer will require these pieces of information. Make a deal with your insurance agent, broker, or other provider: Bring it to the attention of either one of these parties that you require a COI. Ask an expert in the insurance industry for assistance in making this determination if you are unsure whether or not your current insurance policy satisfies the standards. If the standards aren't met by your current plan, speak with your insurance agent or provider about what modifications are necessary to satisfy the requirements and how much the necessary changes would cost. For instance, say a potential landlord demands a $2 million general aggregate maximum on your liability policy. If the existing aggregate limit on your policy is one million dollars, the cost of the increased limits should be communicated to you by the insurance expert who handles your policy. When you have finished making all of the necessary modifications, you should request that your agent or insurer issue the certificate. A certificate holder, also known as the company that will be doing the hiring or the client that will be requesting the COI, can be covered under your liability policy as an additional insured. When an additional insured is added to your policy, they will be subject to the same limits of liability as to the primary insured.The Crux of the Matter
As evidence that a business has commercial liability insurance, a certificate of liability insurance can be presented. It gives a summary of your liability insurance, including policy numbers, effective dates, and coverage limitations, among other relevant information. You can acquire a certificate by making the appropriate request to either your insurance agent or broker or directly to your insurance company. As soon as you realize you'll require a COI, you should start looking for one. It is possible that a general contractor, property owner, or another business will not allow you to begin work or lease property unless you have provided a signed COI to them.Questions That Are Typically Asked (FAQs)
How much does it cost to get a certificate stating that you have liability insurance?
Because it is not a legal contract of coverage but rather evidence of insurance, your insurer will typically offer you a certificate of insurance at no cost because it is proof of insurance.Who is responsible for filling out an insurance certificate for liability?
Insurers are the entities that typically provide certificates. It is also possible for an insurance agent or broker, with the consent of the insurer, to issue them.