What Is a Certificate of Insurance in Real Estate?

A Certificate of Insurance (COI) serves as a standardized document that confirms the existence of an insurance policy for a specific individual or entity. It provides a concise summary of an insurance policy’s key features, including the types of coverage, policy limits, and effective dates. This document is widely used across various industries to demonstrate that an individual or business holds adequate insurance coverage. Understanding COIs is important for mitigating potential risks and ensuring compliance in many professional and transactional settings.

Understanding the Certificate of Insurance

A Certificate of Insurance is a formal document issued by an insurance company or its authorized broker that serves as proof of insurance coverage. It provides evidence that an insurance policy is active and outlines its primary features, such as the conditions and types of coverage. This document is a tool for risk management, allowing parties to verify that an individual or entity they are engaging with has the necessary financial protection in place.

A COI is a summary, not the actual insurance policy itself. It does not confer new rights or extend coverage beyond what is detailed in the underlying policy. It acts as a snapshot, providing a quick overview of an entity’s insurance coverage, confirming compliance with specified insurance requirements. While the insurance policy is a comprehensive legal contract detailing all terms, conditions, exclusions, and limits, the COI is a brief attestation of that existing contract. It simply verifies that a policy is in effect at the time of issuance.

Key Information on a COI

A Certificate of Insurance contains several distinct sections providing specific details about the insurance coverage.

Producer/Insurer Information: This section lists the name, address, and contact details of the insurance agency or broker that issued the COI, along with the name of the insurance company providing the coverage. This information identifies the source of the insurance for verification.
Insured’s Information: This identifies the party whose insurance coverage is being certified, including their name, address, and contact details. This confirms who holds the primary insurance policy.
Policy Details: This includes the Policy Number(s) for identification, along with the Effective and Expiration Dates of the policy, indicating the period during which the coverage is active.
Types of Coverage: This specifies the different insurance policies held, such as General Liability, Property, Workers’ Compensation, or Auto Liability, outlining the scope of protection.
Coverage Limits: This indicates the maximum amount the insurance company will pay for a covered loss, usually broken down per occurrence and in aggregate.
Description of Operations/Locations/Vehicles: This provides a brief overview of the activities, properties, or assets covered by the policy, offering context to the coverage.
Certificate Holder: This section lists the name and address of the party requesting the COI, which is the entity requiring proof of insurance.
Additional Insureds: These are parties added to the policy who receive protection under the named insured’s coverage, often required in contractual agreements to extend liability protection.
Waiver of Subrogation: This endorsement prevents the insurer from seeking recovery from a third party for claims paid, common in situations where multiple parties are involved in a project or property.
Cancellation Notice: This provision specifies the number of days’ notice the certificate holder would receive if the policy is canceled before its expiration date, ranging from 10 to 30 days, providing time to address potential coverage gaps.

Common Real Estate Scenarios Requiring a COI

In the real estate sector, Certificates of Insurance are required to mitigate financial risks and ensure contractual compliance across various transactions and relationships.

Landlord-tenant relationships necessitate a COI for commercial leases. Landlords require tenants to provide proof of liability coverage to protect themselves from potential claims arising from the tenant’s operations or negligence on the leased premises. This helps ensure any damage or injury occurring within the tenant’s space is covered by the tenant’s insurance.

Property owners and managers request COIs from contractors and service providers working on their properties, including repair services, cleaning crews, landscapers, or construction workers. The COI ensures that if an accident occurs, such as property damage or injury to a third party caused by the contractor’s work, the contractor’s insurance will respond, shielding the property owner from direct liability.

Property management agreements include stipulations for property managers to provide COIs to property owners. This demonstrates that the property management company carries its own liability insurance, protecting the owner from claims related to the manager’s operations, errors, or omissions in managing the property.

Lenders require borrowers to provide COIs as part of loan agreements, especially for commercial properties or large development projects. This ensures that the property serving as collateral for the loan is adequately insured against perils like fire, natural disasters, or other damages. The lender requires being listed as a loss payee or additional insured to protect their financial interest in the property should a loss occur.

When properties are used for events, such as festivals, markets, or private functions, event organizers are required to provide COIs. This ensures that the event organizer has sufficient liability coverage for any incidents that might occur during the event, including injuries to attendees or damage to the property.

How to Obtain and Verify a COI

Obtaining a Certificate of Insurance involves a straightforward process initiated by the party requiring proof of coverage. The insured party should contact their insurance agent or broker directly to request the COI. When making the request, provide specific details, including the full legal name and address of the certificate holder, the types of coverage required, and any necessary endorsements such as additional insured status or waiver of subrogation. Insurance providers can generate a COI within a few hours to a few business days, depending on the complexity of the request and the insurer’s processing times.

Once a COI is received, verifying its authenticity and adequacy ensures proper risk mitigation. Confirm that the correct parties are listed, verifying the names of the insured, the certificate holder, and any required additional insureds. Check the policy effective and expiration dates to confirm that the coverage is current and will remain active for the duration of the engagement or contract. Ensuring the dates align with the period of exposure is a primary check.

Reviewing the types of coverage and coverage limits confirms they meet the specified requirements. For instance, if a contract mandates a minimum of $1 million in general liability coverage, this amount should be clearly reflected on the COI. Verify that any specific endorsements, such as additional insured or waiver of subrogation, are explicitly noted if they were a requirement. If there are any discrepancies or concerns about the COI’s validity or the coverage details, directly contact the issuing insurance company or the agent listed on the COI. This direct communication confirms the document’s authenticity and the policy’s active status.