What is a Certificate of Insurance Form and Why You Need to Understand It

It would be a wonderful thing if we could rely on our vendors to do an impeccable job every time. Unfortunately, mistakes do happen, and people do get injured. When either occurs, we hope our vendors have the proper insurance in place. Fortunately, there is an easy way to make sure they do – the certificate of insurance.

What is a Certificate of Insurance?

Certificates of insurance (COI) are very handy documents. In a nutshell, a COI is a summary document drafted by an insurance agent. The document confirms a business has insurance and serves as evidence an insurance policy has been issued on their behalf.

The certificate will include the following information:

  • Type of policy
  • Limits of insurance
  • Name of the insured
  • Name of additional insureds
  • Effective date of coverage
  • Name of the insurance company
  • Exclusions (in some instances)

Why are Certificates of Insurance Important?

If you hire a contractor, you do not want to be liable to pay for any property damage they may cause or an injury resulting from their negligence. Having a contract in place waiving any liability or even requiring insurance is not enough.

The only way to ensure you are protected from becoming responsible for damage or injury is by obtaining proof of insurance. Since insurance policies are cumbersome documents, the COI provides a simple method to help cover your risk.

There are three common certificates of insurance:

  • Certificate of liability insurance
  • Certificate of auto liability insurance
  • Certificate of workers compensation insurance

Make sure requests for the appropriate COI are made before any work begins. It is important to note certificates themselves only provide basic information about insurance coverage and provides no rights to the certificate holder. So, before you begin your next project, ask your contractor or vendor for a certificate of insurance. You’ll be glad if anything should go wrong!