What is a certificate of insurance
A certificate of insurance (COI) is issued by an insurance company or agent and will verify the business coverage and summarizes the conditions of the policy.
Information on a certificate includes
- policyholder’s name
- the insurance company
- effective dates
- policy limits
- types of insurance policies
- Additional insureds
Insurance certificates are used to prove to others that they have insurance coverage and at what limits they carry. Without a certificate of insurance, contractors or other business owners will have a hard time getting new clients.
Understanding a certificate of insurance
The accord form certificate of insurance contains separate sections for the different types of insurance policies. The main 4 insurance policies that are reflected on this certificate are:
- General Liability
- Auto Liability
- Umbrella
- Worker’s Compensation
There is also a spot for other optional policies and you typically see Professional liability or inland marine coverage placed here.
The “insured” box refers to the policyholder or company name who appears on the insurance policy declaration page.
For each of the policies listed the certificate will briefly describe the coverage limits along with the insurance carrier that writes that specific policy.
If a client requests a certificate they become a certificate holder which is located in the bottom left-hand corner and will show the client’s name and address. If the same client wants to be listed as an additional insured, this is also where it would go.
Subcontractors certificates of insurance
You might be asking yourself, why do general contractors want to see a copy of my certificate of insurance. This is because general contractors can be held responsible if subcontractors are uninsured.
This is an entire topic in itself, and we have a blog about why subcontractors need to carry Workers’ compensation even if they aren’t required to by law.
Biggest mistakes business owners make
This might be one of the biggest mistakes business owners make each year. They hire a subcontractor without the proper documentation in place and when it comes time for your insurance audit, you are not prepared.
Every year businesses are paying large audit premiums due to not having certificates on file for subcontractors that they hire to work a job for them.
Every business needs to develop a process to keep track of subcontractor’s certificates.
To learn a good way to do that or to learn more about the reasons why you need to, schedule a call with your insurance agent to help you.
If you don’t have a relationship with an agent or want a review of your insurance then click the button below to schedule a review with one of our trusted insurance advisors.
