How To Get A Certificate Of Liability Insurance

A COI (certificate of insurance) proves to potential business partners and clients that a person’s business is properly covered with the right insurance coverage and it is safe for them to do business together.

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A COI is often requested in the case of a job or project in which liability concerns and the possibility of financial losses are real. People will only partner with businesses that prove they have COI.

This article will enlighten people on what a certificate of insurance is, the purpose of a certificate of insurance, why people need this certificate, what is included in the certificate, and how to get a COI.

KEY TAKEAWAYS

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  • People will learn what a certificate of liability (COI) insurance is
  • The purpose of a certificate of insurance
  • Why people need COI
  • A list of what is included in a COI insurance
  • How to get a COI and answers to some frequently asked questions on COI
certificate of liability insurance
Credit:nerdwallet.comk

What is a certificate of liability insurance?

A broker or an insurance company issues a COI (certificate of insurance). The certificate of insurance verifies the existence of an insurance policy and summarizes the policy’s key/important aspects and conditions.

A standard certificate of insurance (COI) lists the policyholder’s name, the type of coverage, policy effective date, policy limits, and other vital details of the policy.

Without a certificate of insurance, a contractor or company will have difficulty securing clients; most people will not want the risk of any costs caused by the provider or contractor.

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The purpose of COI

COI (certificate of insurance) is used when liability and significant losses are concerned and require one in many business contexts. Contractors and Small-business owners often have a certificate of insurance granting protection against liability for workplace injuries or accidents.

The purchase of liability insurance usually triggers the issuance of an insurance certificate. Without a certificate of insurance, a contractor or a business owner may have difficulty winning contracts.

Because many individuals and companies hire contractors, the client needs to know that the hired contractor or business owner has liability insurance so that they will not assume any risk if the contractor is responsible for injury, damage, or substandard work.

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Why you need a certificate of liability insurance

A COI (certificate of insurance) is issued by a broker or an insurance company and verifies the existence of an insurance policy. Contractors and Small-business owners typically require a certificate of insurance that grants protection against injuries to conduct business or liability for workplace accidents.

If people are hiring a business or an independent contractor for their services on their property, they should require a certificate of insurance. If they are a contractor or businesses, they should have a certificate of insurance so they can prove to their clients that they are insured.

What is included in a certificate of liability insurance?

Below is a list of the details included in a certificate of liability insurance (COI).

  • Insured Name and Address

It is information about a person’s business. The information on the insurance certificate must match the information an individual provided when registering their business with their state.

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The name on their certificate must also match the company name provided to the party requesting it. If their name on the certificate differs from any names they gave to the party requesting it, the certificate might get rejected.

  • Types of Coverage and Information

The insurance certificate provides policy numbers, policy types, coverage limits, and policy expiration dates of each liability policy people have (or are willing to disclose).

The company or individual requesting a certificate will compare this section against the coverages that they are contractually required to have.

  • Broker Information

The certificate provides an individual insurance contact information so a reader can verify coverage or contact their insurance broker team.

  • Insurance Company Information

One of the many fundamental principles of insurance is that the insurance company can pay a claim if a person files one. Many companies that people work with will only do business with companies insured by insurance companies of a certain financial rating.

The insurance company information and the NAIC # allow people to check these important details about the insurance companies they are working with.

  • Description of Operations

This section can be the vague part of the certificate. The description of operations is the section where customized coverage wordings are provided. People can list details about additional insured status, primary and noncontributory, waiver of subrogation, and more.

Sometimes insurance companies can request wording in this section that does not reflect the actual coverages in people’s insurance policies.

For example, saying “General Liability in respect to all damages” cannot be on the certificate since all policies have exclusions. It is necessary to issue certificates that only include coverages on the insurance policy.

  • Certificate Holder

The certificate holder section lists the information about the company or business requesting a certificate. Issuing a certificate with a specific certificate holder and the date the certificate is issued provides reassurance that the certificate is legitimate and the policy is in effect.

Certificate of liability insurance cost

Some insurers provide the certificate of insurance free to existing policyholders, although other insurance providers can charge up to $50 for each new certificate issued.

How to get a certificate of liability insurance 

Suppose people request a certificate of insurance from a business or a contractor. In that case, they should either be able to provide them with their insurance company’s contact information or retrieve it from their insurance company, so they can ask for that proof to be sent to them directly.

Be careful, however, if they ask their vendor to provide them with a certificate of insurance. There have been documented cases of contractors submitting fraudulent insurance certificates.

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Conclusion

If an individual runs a business, chances are they have been asked to provide a COI (certificate of liability insurance) to a company they are working with. Some people reading this might even be the party requesting a certificate of liability!

A certificate of liability (COI) insurance proves that people possess liability insurance coverage. This document describes the types of liability coverage they have, details the coverage, and provides information about the insurance company issuing the coverage.

Businesses and people require this certificate of insurance (COI) because hiring an uninsured business to perform work for them could lead to big problems.

This document assures those people you do business with that they are insured. Additionally, the insurance company will pay for the damages if they need to sue you.

FAQS

Is a certificate of insurance the same as a declaration page?

A Certificate of Insurance and Declarations page is a document that shows the policyholder’s effective dates, name, liability limits, and the broker’s address and name.

However, a declarations page is part of a person’s insurance policy that offers more detailed information, while a certificate of insurance is a document that provides evidence of insurance.

What is the difference between an insurance policy and an insurance certificate?

The main difference between an insurance certificate and an insurance policy occurs under the letter of credit payments. According to the L/C rules, an insurance policy is acceptable in a declaration under open cover or in lieu of an insurance certificate. But the reverse situation is not valid.

How long are COI good for?

Typically, a Certificate of liability insurance is good for 5 years.

Why would a customer ask for a COI?

Customers want to protect their financial interests with COI. Bidding on a job for a state agency or municipality, obtaining a professional license or certification, signing a contract.

Why would a vendor request a COI?

A certificate of liability insurance for Vendors is an insurance document that shows proof of the vendor’s insurance coverage.

The goal of a COI is to show insurance coverage in a standardized and easily understandable format. The vendor’s certificate of insurance shows proof of insurance coverage for all parties working on the project.

You can learn more from the video below:

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