A certificate of insurance (COI) is a document that proves that your company has insurance. Clients may request to see your COI before doing business with you.
This article explains what a certificate of insurance is, why you need one, how to get one, and how much COIs typically cost.
What Is a Certificate of Insurance?
A certificate of insurance is a document you get from your insurance provider that explains the kind of coverage you have. A COI is essential if you need to show proof of insurance if there is an accident or someone files a claim against you. Prospective clients may want to see evidence that you are insured before they choose to work with you.
What Does a Certificate of Insurance Typically Include?
A certificate for insurance includes the information within your policy but is not the same as the actual policy. A COI summarizes your policy and describes the kind of insurance you have and what it covers. A COI typically includes your contact info, policy type and terms, and whether you have any additional insureds.
Mailing Address
This part of the COI shows your business’s physical mailing address.
Business Operations
Your COI will typically list your business’s operations and locations.
Contact Information for the Insurance Company
This section of the COI will include your business’s name and phone number.
Type of Policy
Your COI will explain what kind of insurance you have. There are several different types of insurance small business owners may need, including:
- General liability: Protects against lawsuits due to bodily injury, property damage, or reputational harm
- Professional liability: Helps cover lawsuits concerning negligence claims or business mistakes
- Commercial property: Pays for damages to your company’s buildings, equipment, or inventory due to fire, lightning, hail, wind, theft, or vandalism.
- Workers’ compensation: Helps pay for employees’ medical expenses and lost wages if they get hurt on the job.
- Commercial auto: Helps pay for car accidents and medical payments.
- Cyber or data breach: This can help cover costs associated with recovering from a cyberattack or data breach, such as notifying affected customers or paying for credit monitoring services.
- Business income: If your business has to close temporarily, business income insurance can help cover lost revenue.
- Commercial umbrella: This insurance extends your coverage limits in case of an event that exceeds your other policy limits.
Policy Effective Dates
Your policy effective dates show how long your insurance is active and when it expires.
Coverage Limits
Your coverage limits are the amount the insurance company will pay out if covered events occur. This part of the COI explains the amount your policy will pay for each claim and the maximum amount it will pay out for all claims.
An Additional Insured on Professional Liability or Other People and Companies on the Policy
Some clients may request you to add them to your professional liability insurance as additional insureds. An additional insured is an endorsement (modification) to your policy. Including an additional insured on your policy means that your coverage extends to that person or group, although it may not offer them complete protection. If you have an additional insured on your professional liability policy and a client sues them, they can file a claim with your insurance provider.
Business partners, landlords, and contractors are examples of people who might want you to add them to your insurance. Your COI will list any additional insureds on your policy.
Why Do I Need To Provide a Certificate of Insurance?
A certificate of insurance for small businesses can help you compete with others in your industry. If you are bidding on jobs or a client is choosing between companies and time is of the essence, being able to present a COI when requested could mean the difference between winning and losing a contract.
You may need a business certificate of insurance before working with certain clients.
For instance, if you own a construction company that wins a bid for a public works project, the government agency in charge of issuing contracts will likely require you to present a COI before starting the job.
How To Get a Certificate of Insurance
To get a business insurance certificate all you (or the interested party) have to do is request a COI from your insurance provider or agency. Some providers make your COI available online, and may give you the ability to share it with other parties. They may also email a copy of the COI to the individual or group that has requested it.
Once an individual receives a COI they become a certificate holder, and their contact info will be added to the document. You are responsible for notifying certificate holders if you cancel your policy before it expires.
How Much Does a Certificate of Insurance Cost?
COIs are typically provided at no cost through your insurance provider. If, however, you need to have the COI physically mailed or overnighted, you may need to pay associated shipping fees. You do need to have an existing insurance policy to get a COI, so you will need to choose a policy and pay your premium before requesting a certificate of insurance.
Conclusion
A certificate of insurance is a document that shows the details of your insurance policy. It typically includes your contact info, policy type and terms, and lists any additional insureds. You may need to provide a COI when requested by a potential client.
A COI is generally free, and all you need to do to get one is ask (or have your client ask) your insurance company or agent to provide it.
What does a certificate of insurance mean in business?
Entrepreneurs may find themselves wondering, what is a COI in business? A certificate of insurance in business is a document that shows your insurance terms, including coverage, limits, and policy effective dates. A small business certificate of insurance serves as proof of insurance for potential clients who want to make sure you are covered should an accident or covered event occur.
