What Is a Certificate of Insurance (COI)?

What Is a Certificate of Insurance (COI)?

Let me explain what a certificate of insurance, or COI, really is. It's a document that an insurance company or broker issues to confirm that an insurance policy exists and to outline its main terms and conditions. For instance, you'll see details like the policyholder's name, the effective date of the policy, the type of coverage provided, the policy limits, and other key aspects of the policy.

If you don't have a COI, as a company or contractor, you'll struggle to land clients. They won't want to take on the risk of any costs that could arise from your work, so this document is crucial for building trust and securing business.

How Certificates of Insurance (COI) Work

You encounter certificates of insurance in scenarios where liability and major losses are a big deal, which is pretty much in every business setting that requires proof of coverage. Essentially, a COI is your way to demonstrate that you have insurance in place.

As a small business owner or contractor, you'll often carry a COI to show you have insurance that covers liability for accidents or injuries at work. When you buy liability insurance, the insurer typically provides this certificate automatically.

Without one, winning contracts becomes tough. Clients hire contractors and want assurance that you have liability insurance, so they don't end up bearing the risk if you cause damage, injury, or deliver poor work.

Important Note on Hiring

If your company is hiring a contractor or another service provider, you should get a copy of their COI and verify it's current.

Validating a Certificate of Insurance

Typically, if you're a client, request the certificate straight from the insurance company, not from the business owner or contractor. Confirm that the insured's name on the certificate matches exactly the company or contractor you're dealing with.

Also, check the policy's coverage dates to make sure it's current. If the policy expires before your project finishes, get a new certificate.

Details of a Certificate of Insurance

Certificates of insurance have separate sections for various liability coverages, such as general, auto, umbrella, and workers’ compensation. The 'insured' is the policyholder, person, or company covered by the insurance as listed on the certificate.

You'll find the policyholder’s name, mailing address, and a description of their operations. The issuing insurance company's address is there too, along with contact info for the agent or agency. If multiple insurers are involved, all their details are included.

When you request a COI as a client, you become the certificate holder. Your name and contact info go in the bottom left, with statements about the insurer's duty to notify you of cancellations.

The certificate summarizes the insured’s policies and limits for each coverage type. For general liability, it might list six limits by category and note if it applies per claim or per occurrence. Workers’ compensation shows no limit due to state laws, but employer’s liability limits are specified.

How to Get a Certificate of Insurance

If you're asking for a COI from a contractor or business, they should get it from their insurer or give you the insurer's contact so you can request it directly. Be cautious if you let the vendor provide it themselves—there are cases of fraudulent COIs being submitted.

Who Needs a Certificate of Insurance (COI)?

Simply, if you're hiring an independent contractor or business to work on your property, require a COI from them. And if you're the contractor or business, have a COI ready to show clients you're insured.

How Long Is a Certificate of Insurance Good for?

To be safe, keep any COI you receive indefinitely. You never know when an issue might come up from a past job on your property or one you did for someone else, and having the proof will help resolve it.

When Should I Get a Certificate of Insurance?

Ask for and receive a COI before any work starts on your home or property. If there's a written contract, include insurance requirements like coverage types and limits, and verify them with the COI.

The Bottom Line

You might need a Certificate of Insurance (COI) in various situations. Usually, a client will ask your insurance company directly for it to confirm you have the right coverage. If you're hiring a contractor, get their COI from the insurer, even if you've worked together before, since coverage can change.