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Similar to an insurance card, a certificate of insurance is a document that shows insurance coverage. Basically, it’s a document that summarizes your policy’s details and provides some basic information about your policy’s coverage

This article will explain what an insurance certificate is, how to obtain one, who might ask to view one, and why it is so relevant. 

Explaining A Certificate Of Insurance

This document summarizes your business insurance policy. A certificate of insurance is different from an insurance policy because policies are legally-binding contracts between you and the insurer, but certificates are not. It contains basic information about your coverage and only reflects what’s written in the policy. A certificate of insurance includes the following information:

  • The expiration date of the policy 
  • The effective date of the policy
  • Insurance company 
  • Covered parties, including additional insureds
  • The type of insurance (e.g., general liability, workers’ compensation, professional liability, automobile liability, umbrella protection)
  • Exclusions and limits of coverage
  • The policy number

Similar to an insurance declaration page, it usually outlines the key features of your insurance plan. It is also known as a COI, proof of insurance, or certificate of insurance. 

These documents are provided in standard forms. Acord 25 forms are commonly used by insurance agents, and some call them Acord certificates. 

Certificates Of Insurance: What Is Their Purpose?

A certificate of insurance proves that a small business owner has adequate insurance coverage. Anyone who asks you about your insurance policy can see it. Risk management lets others know that you’re insured in case of liability. 

You might be hired to assist a contractor if you run a landscaping company. A contractor will want to ensure that you have the appropriate insurance levels before you sign the contract. As a result, in case property damage or bodily injury occurs on the job, your insurance company will handle the claim instead of the contractor’s. 

In addition to requests from your subcontractors, you might also need to request COIs from other businesses you work with. In the event of an audit, asking your subcontractors for their Certificate of Insurance can prove that they carry workers’ compensation and general liability insurance. By doing so, you do not have to pay a premium for the use of uninsured subcontractors. Nobody wants to be surprised with a premium during an audit

The following situations may require a certificate of insurance:

  • A prospective client wants to hire you to install a brand-new roof. If anything goes wrong, they expect you to be insured. 
  • In the course of submitting a bid for a project, one of the requirements is to submit proof of insurance.
  • The owner of a nail salon wants to develop a partnership with a cosmetic business. In the event that any of your clients react negatively to the polish and sue, you will want to make sure it has the right insurance in place. 

You could be asked for a COI by any company you work with or a client you serve. As a result, you won’t have to file a claim under their policy if something turns out wrong. As a business owner, you can also request a Certificate of Insurance. This will help you and your company minimize risks. 

How Do You Get A Certificate Of Insurance?

If you are asked to provide a certificate of insurance, ask your broker to provide it. The certificate is usually free. Depending on your broker, you may have to fill out a form online with your name and address. 

Take note of these general guidelines when reviewing your COI: 

  • Confirm that the business name entered is correct. You must be listed as a policyholder if your business is under your name. If your business is an LLC, it should be listed instead. You or your DBA can be included if you’re working with a DBA.
  • Ensure that the certificate holders and additional insured are listed correctly. Make sure every person listed on your COI has correct spelling and contact information. To add any additional insured, you should contact your broker. 
  • Make sure your policy hasn’t expired now. If your policy is about to expire, contact your broker right away. 

In addition, make sure that your coverage limits match those of the entity requesting the COI. Request that your broker implements the changes required to bring your plan up to their standards if they are not. 

Does It Take Long To Get A Certificate Of Insurance?

It may be possible for you to get a COI instantly if you don’t need to make any changes to your insurance coverage. It may take your insurance company up to 48 hours to handle your request. 

Changes may take longer if they are necessary. You should not wait until the last minute to take care of this task, in case your insurer takes a while to respond. 

How Does A COI Work?

A certificate of insurance shows that you are covered by insurance to another company or individual. Forms like these are typically needed at the beginning of a new project or when hiring new employees. 

If you don’t already have a policy, you’ll need to apply with your broker insurance company first if you’re asked to submit a COI. After the policy has been activated, you can request an insurance certificate. 

You might also have to make changes to your policy before requesting the COI. You’d either have to decline the project or obtain the correct insurance coverage if the project manager requires commercial general liability and you only have professional liability. A certificate of insurance can prove that the new policies have been renewed if you choose to add or update your insurance.

What Is A Certificate Holder On A COI?

You might be asked to be listed as a certificate holder when a company requests a certificate of insurance. As a result of this process, your insurance plan is not altered or changed in any way. Your certificate holder will be notified if your insurance policy changes or if you cancel your policy. The insurance company can add the certificate holder on your behalf. It will also handle all updating for you.

Who Needs A Certificate Of Insurance?

An insurance certificate may be required for anyone with a business. Generally, this occurs when businesses have greater liability for damage or loss. These include: 

  • General contractors
  • Specialized subcontractors such as electricians, roofers, and window cleaners
  • Delivery drivers
  • Tech specialists
  • Consultants

Whatever kind of business you run, proof of insurance may be required. 

A Guide To Verifying Certificate Of Insurance

In the event, you ask a small business owner for a certificate of insurance, you need to be aware that such forms can be faked. The information on such documents may also be incorrect. COIs are just references to insurance coverage and are not legal documents. Thus, a certificate of insurance that someone gives you does not prove they are insured. 

You should verify any COI you receive since it may contain incorrect information. 

Here are a few things you can do to verify authenticity: 

  • Please review the policyholder’s contact information carefully and confirm that it matches the person or company you are working with.
  • Ensure that the policy limits correspond to your requirements.
  • Verify the policy’s expiration date and see if the policy is still valid when your project is completed. Before the old COI expires, ask for an updated one. 
  • Verify coverage by contacting the agent or broker using the insurer’s information on the card. 

Prevention Is The Key To Avoiding Accidents

Ask your broker for a certificate of insurance if you are asked to produce proof of insurance. In this way, everyone can see what kind of insurance plan you have. Insuring yourself can help minimize your risks and increase your chances of getting contracts.

As a Professional Employee Organization (PEO), P.E.O.PayGo can help you get workers comp, bundle payroll, and HR, and perform all the headache functions of a small business, all while saving your time and money. Let our Instaquote do all the work, we don’t need much information and it takes 2 minutes. Our software does all the work for you. 

Get Ready, Set, and Covered Now!

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