Imagine this: your budding painting business is on the brink of landing its biggest deal yet. A high-profile real estate developer in town wants you to paint the inside of a new 120-apartment building. This gig could keep your crew busy for weeks and bring in a hefty profit. But there’s a catch. The developer needs written proof that you’ve met their insurance requirements, and they need it pronto, or you risk losing the job to a rival. This proof comes in the form of a certificate of insurance from your business insurance company, but you’re not sure what that is or how to get it.
So, what’s a certificate of insurance? It’s a document that gives a summary of your business insurance policy. Your insurance company can provide a signed copy at your request. It’s also possible to get a certificate of insurance for personal insurance policies, but that’s less common. For instance, a bank or lender might ask for a certificate of car insurance, but that’s usually only if they think you’ve canceled or reduced your coverage.
A certificate of insurance is usually just one page long and includes details like the name and address of the policyholder, a description of the services the business provides, the name of the business’s representative, the name and address of the insurance company, the type of coverage or policy, the policy’s effective and expiration dates, coverage details, and other important policy details. The name of the certificate holder, usually the business requesting the certificate, is also included.
When you request a certificate of insurance form, make sure it’s in the right format. One of the most common formats is the ACORD 25 form, also known as an ACORD certificate.
Why do you need a certificate of insurance? It’s proof that you have the insurance coverage you claim to have. An ID card or screenshot of an email from your insurer won’t be enough for people and businesses that are serious about protecting themselves. You’ll likely be asked for a COI if you’re hired as a subcontractor, if another company hires you to provide labor or services, if you contract with a government or municipal entity, if a homeowner hires you to work on their home or property, or if you rent or lease commercial property or equipment. Without a valid COI, you could miss out on potentially lucrative contract work or leasing arrangements.
A certificate of insurance reassures the people and companies you work with that your company has adequate insurance. A person, company, or government you work with usually has to request a COI from your insurance company, making them a certificate holder. Their name and contact information appear on the certificate they receive, and the insurance company must notify them if you cancel your policy before the expiration date.
You can get a certificate of insurance for any type of insurance policy, but some are more common than others. The most commonly requested types of COIs are those for liability insurance, workers’ compensation coverage, and personal or commercial vehicle coverage.
If you’re a small business owner in a high-risk industry, you’ll probably be asked for a certificate of insurance at some point. You can get a COI from your insurance provider or your insurance agency. Many insurance companies now offer them online or through their mobile apps. You shouldn’t have to pay anything to get a COI, though you might have to pay extra for fast shipping if you need it quickly and your insurer can’t give you a digital copy.
A COI is valid at least until the policy expiration date unless it’s canceled earlier. After expiration, it’s the certificate holder’s responsibility to contact the insurance company for a new one. If the policyholder cancels it, the insurance company will notify you.
Being a certificate holder on a COI doesn’t mean you’re an additional insured. You’re only covered by the policy if you’re added to it with a formal additional insured endorsement. An additional insured is a person or business added to a commercial general liability policy. They’re then covered by the policy just like the main policyholder.
Not providing a COI could seriously harm your business prospects. But getting one isn’t hard. You just need to call your insurance company or insurance agent and have them send it to the certificate holder-to-be. Some insurers and insurance agencies now provide electronic certificates of insurance that don’t have to wait for the post office. Yes, it’s one more thing to add to your to-do list, and it might not be the most exciting task, but it’s definitely worth the effort.
