What Is a Certificate of Liability Insurance?

A Certificate of Liability Insurance (COLI) serves as official documentation confirming an active insurance policy. It provides a concise summary of an insured party’s coverage, acting as proof of financial protection against certain risks. This single-page document, often an ACORD 25 form, helps demonstrate that a business or individual has the necessary insurance to safeguard themselves and others in various professional and commercial interactions. Its purpose is to offer assurance to third parties, indicating that the policyholder is financially prepared to address potential liabilities, such as property damage or bodily injury claims.

Key Information on a Certificate of Liability Insurance

A Certificate of Liability Insurance condenses important policy details onto a single page. It includes:
The insured’s legal name and contact information, such as their business address.
The insurance company’s name, contact details, and unique policy number.
Different types of liability coverage (e.g., general, professional, commercial auto) with effective and expiration dates.
Coverage limits, including per-occurrence and aggregate limits.
The name and address of the certificate holder (the entity requesting the COLI).
Details of the insurance producer or broker who issued the certificate, and any specific endorsements or special conditions.

When a Certificate of Liability Insurance is Required

A Certificate of Liability Insurance is frequently requested when one party needs assurance that another is adequately insured against risks. Contractors and service providers often provide a COLI to clients before starting work, ensuring the client is not solely responsible for damages or injuries caused by the contractor. Tenants leasing commercial properties are typically required by landlords to furnish a COLI, protecting the landlord from liabilities arising from the tenant’s operations. Vendors participating in events or markets commonly provide a COLI to event organizers, mitigating associated risks. Businesses seeking new contracts, partnerships, or professional licenses often present a COLI to demonstrate financial responsibility and compliance.

Steps to Obtain and Authenticate a COLI

Obtaining a COLI

Obtaining a Certificate of Liability Insurance typically begins with contacting your insurance agent or broker. You will need to provide them with specific details about the entity requesting the COLI, known as the certificate holder, including their name and address. Additionally, you should communicate any specific coverage requirements or project details that the certificate holder needs to verify. Your agent will then issue the COLI, often electronically, within a short timeframe, sometimes instantly or within a few hours.

Authenticating a COLI

When you receive a COLI, authentication is important to ensure its validity and accuracy. Verify that the certificate holder’s name and address are correct and match the requesting party. Confirm that the policy effective dates are current, ensuring continuous coverage for the relevant period. Check that the types of coverage and the stated limits meet all contractual requirements. For the most reliable authentication, directly contact the issuing insurance company or broker, using contact information obtained from their official website, not from the COLI itself, to confirm the policy’s validity and accuracy.