What is a Certificate of Insurance?
- A certificate of insurance is a document that shows your business has active insurance coverage.
- It’s usually shared with clients or partners who need to see proof of your protection before working with you.
What is a certificate of insurance?
A certificate of insurance, or COI, is most commonly associated with small business insurance and often refers to liability coverage. This document acts as proof of insurance coverage and is issued when you buy a small business liability insurance policy. In the following sections, we will outline when you need it, what it covers and other details.
What does a certificate of insurance look like?
A COI verifies the existence of an insurance policy, and the document itself contains all the standard information often included on a declaration page or insurance binder. A standard COI will list the policyholder’s name, effective dates, coverages, policy limits and key details.
When do you need a COI?
Certificates of insurance are used most often in small business transactions and provide proof to the client or customer that the business is insured. This is particularly important where liability or significant losses are of concern, making COIs synonymous with liability insurance certificates. COIs come up most frequently in the following situations:
Even if you’re just starting out in your new business, having insurance tells your potential customers that you have the financial backing to cover losses if they occur. This increases your dependability and heightens your reputation, making customers more likely to feel safe doing business with you.
Whether you are working with a partner business or doing work for a customer, contracts are essential. Clients may request a COI in terms of the contract. An insurance policy protects you and your clients against potential losses, so it’s never a bad idea to hold one.
If a business hires you as a contractor, they want to know that they will not be held responsible should a loss occur due to contractor mistakes. With liability insurance, losses are typically covered and don’t need to involve the hiring company.
Just like with homeowners insurance and in some cases, renters insurance, lessees are required to hold certain levels of insurance in order to be granted a lease for a commercial property. Your COI will serve as sufficient evidence of insurance when signing a lease.
What does the COI show?
A certificate of insurance (COI) gives a quick snapshot of your business’s insurance coverage. It lists the types of insurance you have, the coverage limits, and who’s insured, whether that’s you, your business, or anyone else included on your policy.
Most small business COIs include sections for:
- General liability insurance: covers injuries or damage you cause to other people or their property.
- Commercial auto insurance: covers accidents involving your business vehicles.
- Umbrella insurance: adds extra protection beyond your other policy limits.
- Workers’ compensation insurance: covers medical costs and lost wages if an employee gets hurt or sick on the job.
Each section shows how much coverage you have and what’s included. For example, general liability might show separate limits for accidents that happen at your workplace, from your products or services, or from contractors working on your behalf.
It’s also worth knowing what liability insurance doesn’t cover. It won’t pay for damage to your own business property or for lost income if you have to close because of a fire, storm, or other covered event. Those types of situations are typically covered under commercial property insurance and business interruption insurance instead.
Other considerations of COIs
When a client requests a certificate of insurance, they become a certificate holder. There is a special section on each COI that contains the client’s name and contact information, as well as statements showing the insurer’s obligation to notify the client of any policy cancellations.
All insurers involved in the small business will be listed on the certificate if there is more than one. The general liability section will indicate whether coverage applies on a per-claim or per-occurrence basis. While workers’ compensation is mentioned in the COI, each state has its own laws that determine the limits. On a standard COI, the workers compensation section will show no limit.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
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- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.