A certificate of insurance form establishes proof of insurance and summarizes your coverage on one page. Here's how to read and use a certificate of insurance.
When a new client hires your company, they want to know that working with you won’t increase their legal liability. Similarly, when you hire vendors or subcontractors for your firm, you want assurance that hiring them won’t harm you financially.
How do both parties put these concerns to rest? By obtaining a certificate of liability insurance from an insurance company.
A certificate of insurance (COI) form is a document that establishes proof of insurance, most often for a general liability policy. It lists you or your business as the policyholder or named insured. The form also specifies the type of liability insurance involved, the policy limits, and the effective dates of coverage, or policy period.
This shows everyone involved that you are adequately insured. By reviewing a COI, your customers can close deals knowing there’s an insurance safety net in place. (See a certificate of insurance example [PDF]).
Most business owners strive to be competent, honest, and truthful. Sadly, reality may fall short of expectations. Vendors and business partnerships might:
Asking for a current COI helps verify a potential vendor or subcontractor’s financial responsibility claims. When lining up work with a new client or vendor, never hesitate to provide or ask for a certificate of insurance form. It’s simply a good business practice.
