What Is a Certificate of Insurance?
A certificate of insurance (COI) is a one-page document that proves that your business has liability insurance coverage. The form has been standardized since the 1970s, meaning all insurance companies use a similar form. Today, the form is often carried as a digital document on mobile devices.
A liability insurance certificate includes all of the important details of your insurance policy that others might need to know. It shows:
- The type of coverage you have (e.g., bodily injury)
- Your coverage limits (e.g., liability insurance cost and coverage amounts)
- Other details that demonstrate your coverage (e.g., a blanket additional insured endorsement, etc.)
If you are supposed to have liability insurance to perform business activities, the certificate is the simplest way to show that you have current coverage.
When Do I Need to Provide a Certificate of Liability Insurance?
Many businesses keep a liability insurance certificate on hand to present whenever it's required.
For example, a catering business might keep a certificate ready to show when it delivers food to an event. If the catering company is catering a corporate event, the corporation is going to want to know that the caterers have proper insurance. The caterers can pull up the document on a smartphone and prove coverage in a few minutes.
If a film production company decides to film in a public space, it would likely keep a certificate ready upon arrival and until it leaves the location. Government officials, business owners, and law enforcement might all come to verify that the production company had liability coverage. After all, the film crew could accidentally damage public or private property during filming.
How to Get a Certificate of Liability Insurance
A liability insurance certificate is easy enough to get through your insurance company, so long as you have a business liability insurance policy. Some insurance companies provide certificates for free, while others charge $50 or more per certificate.
If you think you are going to need to show proof of your liability insurance, small business owners can get a liability insurance certificate by doing the following:
- Verify what coverage you are going to need. You don’t want to head out to do business only to find out you don’t have sufficient coverage. Contact any organizations that are going to require you to carry coverage and verify what coverage they expect.
- Contact your insurance provider and ask about your coverage. Once you know what coverage you need, check with your insurance provider and make sure your coverage is adequate. If you need more, request the provider make any needed changes.
Request a liability insurance certificate. Now that you know you have the right coverage, you can ask for a certificate. Your insurance provider should be able to give you an electronic certificate quickly.
How to Read a Certificate of Liability Insurance
A certificate of insurance contains a lot of important information, but that information may be difficult to decipher unless you are an insurance professional. The language used on the certificate is designed for insurance companies and legal situations, so it can be helpful to have a guide on how to read it.
Some of the main information you will see on your certificate includes:
- Disclaimer: Explains the certificate and the purpose of the information presented.
- Producer: The insurer, agent, or broker that represents your company.
- Insured: The party covered by the insurance policy.
- Insurers Affording Coverage: The insurance company providing the coverage.
- Coverages: The policies purchased by the insured.
- Description of Operations, Locations & Vehicles: Details of the business.
- Certificate Holder: The party that the certificate was issued to.
- Cancellation: Explains the requirements for cancellation of the policy.
- Authorized Representative: The insurer, agent, or broker authorized to sign the certificate.
The information on the certificate should be sufficient to show you have liability insurance. The most important information is the types and amounts of coverage you have. Once they see your liability insurance coverage is sufficient to pay for any expected problems, you should be free to go about your business. They can use the contact information on the certificate to speak to your insurer or agent.
Frequently Asked Questions
What is a certificate of liability insurance?
A certificate of liability insurance is a document that summarizes your liability insurance coverage and demonstrates that you are currently carrying that coverage. There are times when your business may need to show that you have liability insurance, and you can use the certificate to prove your coverage. This one-page document can be in the form of a paper document or in the form of a digital document which you can carry on your mobile device.
Is a certificate of insurance the same as a policy?
No. A certificate of insurance can only be used for informational purposes to verify the existence of the applicable policy.
Does my business need a certificate of liability insurance?
It never hurts to have a certificate because it makes it easy to prove that you have insurance coverage. Some businesses need a certificate more than others, though.
For example, a solo app developer that works from home might not need to prove liability coverage very often, while a food truck owner might need to show proof of liability insurance every time they change locations. If you think you will need to show that you have liability insurance very often, it’s a good idea to get a certificate.