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What is a Certificate of Insurance (COI)?

Definition: An insurance certificate is a document that is issued by your insurance company to prove that you are insured and provides important information about your policy.

Why do I need an insurance certificate?

By hiring a supplier or contractor, people tend to want to know that the company has insurance. It is important to them that they will not be liable for damage caused by the supplier or contractor. This is where the insurance certificate (COI) comes in.

  • The purpose of the COI is to confirm to potential and existing customers that your company has the required liability coverage. The certificate briefly indicates who the policyholder is, the insurer’s name, type of coverage, coverage limits and more.
  • In the event that you own a company, an insurance certificate can help persuade customers to work with you, not competitors, or guarantee them that you are complying.

If you are a private person who employs a company, the insurance certificate gives you confidence that you will not have to be responsible for the damage caused by them.

Let’s say a food provider is hired for a wedding. It serves dishes made with expired ingredients, and as a result, several guests become ill and need medical attention. Least of all, you would like to be in a situation where, due to a supplier error, you will have to pay medical bills.

By making sure a service provider has appropriate liability insurance in advance, you can be sure their insurer will cover the costs instead of you. Asking about having an insurance certificate is a good idea if you hire a company in a situation where damage can be done. If a company cannot provide an insurance certificate, it may have trouble getting contracts.

What does a COI include?

There is no single form for insurance certificates. One common is the Association for Cooperative Operations Research and Development (ACORD) format, which sets standards for the global insurance industry. It includes:

Date: When the insurance company issued the insurance certificate.

Producer: The name of the insurance broker or agent who issued it. This section also contains the address and contact details of the insurance company.

Insured: This section contains the name and address of the insured. It must match the name specified by the company.

Insurers affording coverage: This is a list of insurance companies issuing policies.

Insurance Coverage: This section briefly lists all insurance policies available to the company. These may include liability insurance, employee compensation insurance, auto insurance or umbrella insurance. It also lists policy numbers, effective dates, and expiration dates.

Coverage limits: These are the maximum amounts that the insurance company will pay to cover any liabilities. Limits may apply to each case, to specific losses (such as medical expenses or personal injury per person), or to the policy as a whole.

Description of operations/places/vehicles: This section is kind of comprehensive. It can include any important information about the company’s activities, such as specific jobs or vehicles. An additional policyholder may also be listed here (see below for more on this).

Certificate holder: This is the person to whom the insurance company or agent issued the form.

Cancellation: The insurance certificate indicates the expiration date. It also states that if the policyholder gives up insurance earlier, the company will notify the holder of the certificate.

Signature: This is the signature of the authorized representative who issued the certificate.

How can I get an insurance certificate?

A business owner must carry an insurance certificate to show it to potential customers. You can get this form by contacting your insurance company.

However, people who hire contractors and other firms often want the insurance company to issue a COI directly to them. Obtaining a COI directly from the insurance company ensures that the contractor has not provided a forged document. The insurance agent is usually the one who issues the COI.

What are the COI practices?

By asking a contractor or supplier to provide an insurance certificate, you should review this document to ensure that you have the coverage you need. Here are a few rules that you need to adhere to when familiarizing yourself with the form:

1. Make sure that the business you are hiring matches the company name on the certificate.

2. Check insurer ratings: Check the rating of each insurer listed by AM Best, a credit assessment company in the insurance industry, to make sure the insurer can be good for their money.

3. Check the validity dates. If the insurance policy expires while you are working with the company, you can make changes to your contract and require the company to provide an updated certificate 30 days before the expiration of the current certificate.

4. Make sure your company has the appropriate coverage.

5. Make sure the policy limits are sufficient. Make sure insurance limits are high enough to cover any liabilities that may arise.

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