How Much Does a Certificate of Insurance Cost?
Get clarity on Certificate of Insurance expenses. Learn why the document is typically free and what factors shape your overall insurance costs.
A Certificate of Insurance (COI) is a document often encountered in business. While many wonder about its cost, a COI itself typically does not carry a direct fee. The perceived “cost” is actually the premium paid for the underlying insurance policy it represents. This document serves as proof of existing coverage, not a standalone product or service.
Understanding a Certificate of Insurance
A Certificate of Insurance (COI) functions as a concise summary of an existing insurance policy. Its purpose is to provide verification of insurance coverage to interested third parties, such as clients, landlords, or contractors. This document is issued by an insurance company or an authorized broker, confirming that a specific policy is in effect.
A standard COI typically includes several key pieces of information. These details encompass the policyholder’s name and address, the name of the issuing insurance company, and the specific policy number. It also outlines the types of coverage in force, such as general liability or workers’ compensation, along with their respective policy limits and the effective and expiration dates of the coverage. If applicable, a COI may also list additional insureds.
The True “Cost” of a Certificate of Insurance
A Certificate of Insurance is issued without direct charge by the insurance provider or broker. It functions as proof that an underlying insurance policy has been purchased and is active. The actual financial outlay is the premium paid for the comprehensive insurance policy itself. For instance, if a business needs a COI to prove general liability coverage, the cost is the premium for that general liability insurance, not for the certificate document. The COI merely serves as official documentation that an existing, paid-for policy, such as general liability, professional liability, or workers’ compensation, is in force.
Factors Influencing Insurance Policy Premiums
Since the perceived “cost” of a COI is tied directly to the underlying insurance policy, understanding what drives insurance premiums is essential. Insurance companies assess various factors to determine the premium amount for a policy. The type of business or activity plays a significant role, as industries with higher inherent risks typically face higher premiums. For example, a construction company will have different risk factors than a retail store.
Coverage limits and deductibles also directly influence premium costs. Higher coverage limits, which represent the maximum amount an insurer will pay, generally result in higher premiums. Conversely, choosing a higher deductible, the amount paid out-of-pocket before coverage begins, can lead to lower premiums.
Other considerations include the business’s location, which can impact risk due to factors like natural disaster exposure or crime rates, and the company’s claims history. A history of frequent claims often indicates a higher future risk, leading to increased premiums. For small businesses, general liability insurance might average around $42 to $69 per month, though this varies greatly.
How to Obtain a Certificate of Insurance
Obtaining a Certificate of Insurance is straightforward, typically involving contact with the insurance provider or broker directly. The policyholder, or an authorized representative, initiates the request. Most insurance companies offer convenient ways to request a COI, including online portals, phone calls, or email.
When making a request, provide specific details. This includes identifying the COI recipient (e.g., client or landlord), their name and address, and any requirements for additional insureds or specific coverage limits. Upon receiving the request, the insurer or broker typically generates the COI quickly, often within hours or a day, and provides it to the policyholder to share with the requesting party.