What Is the Certificate of Insurance?

A Certificate of Insurance (COI) is a common document used in both business and personal transactions. It provides a summary of an insurance policy, outlining key details about the coverage in place. The COI is frequently requested to demonstrate proof of insurance, offering reassurance to parties entering into agreements or engaging in services.

Understanding the Certificate of Insurance

A Certificate of Insurance (COI) functions as an official summary of an existing insurance policy. Issued by an insurance company or broker, it confirms that a policy is in effect and provides essential details about its coverage. This document is a condensed version of a typically multi-page insurance policy, offering an easily digestible format for quick access to crucial information.

It is important to differentiate a COI from the actual insurance policy. While the COI acts as proof of coverage, the policy is the comprehensive legal contract detailing all terms, conditions, exclusions, and limits. The COI does not amend, extend, or alter the coverage provided by the underlying policy; only an endorsement or amendment to the policy can effect such changes. The Association for Cooperative Operations Research and Development (ACORD) developed standardized forms, such as the widely used ACORD 25, to unify the presentation of liability insurance policy information across the industry.

Components of a Certificate of Insurance

A standard Certificate of Insurance contains specific sections detailing the insurance coverage. The “Producer” section identifies the insurance agent or broker who issued the certificate. Information about the “Insured,” the policyholder, including their name and mailing address, is displayed. The names of the “Insurer(s) Affording Coverage” are also listed.

Key “Policy Information” includes the policy number, the effective dates, and the expiration dates of the coverage. The COI specifies the “Types of Coverage” held, such as General Liability, Commercial Auto Liability, or Workers’ Compensation, along with their respective “Limits of Liability,” indicating the maximum amounts the insurer will pay for covered losses. A “Description of Operations/Locations/Vehicles” section can provide specifics related to the insured’s activities or property.

The “Certificate Holder” is the entity or person requesting the COI and receives proof of the policy without necessarily having coverage under it. An “Additional Insured” is an entity or person specifically added to the policy, extending protection for liabilities related to the primary policyholder’s actions. A “Waiver of Subrogation” is a provision that removes the right of one party’s insurer to seek compensation from another party for insured losses. Finally, the “Cancellation Notice” section indicates how much advance notice the certificate holder will receive if the policy is cancelled, typically ranging from 10 to 60 days depending on the reason for cancellation and policy provisions.

Purpose and Common Uses

The primary purpose of a Certificate of Insurance is to provide quick and verifiable proof that an individual or business possesses valid insurance coverage. It serves as a tool for risk management, ensuring that third parties involved in a transaction are adequately insured.

COIs are frequently required due to “Contractual Requirements” in various business agreements. For instance, landlords often require tenants to provide a COI, and general contractors typically ask subcontractors to furnish one before beginning work. This helps mitigate risk for the requesting party by ensuring that the other party has appropriate coverage for accidents or damages. The document also assists in meeting “Compliance” needs, such as regulatory or industry-specific insurance stipulations. Ultimately, the COI enhances business credibility and provides peace of mind by confirming that necessary protections are in place before entering into agreements.

Obtaining and Verifying a Certificate of Insurance

Obtaining a Certificate of Insurance is a straightforward process for the insured party. The policyholder typically contacts their insurance provider or broker to request the document. When making the request, it is important to provide all necessary details, including the name of the certificate holder, the specific types of coverage required, and any other particular endorsements needed, such as additional insured status. Many insurance companies can issue a COI instantly or within a few hours.

Upon receiving a COI, it is important to verify its authenticity and accuracy. The most reliable method is to directly contact the insurance provider listed on the certificate using publicly available contact information, rather than information provided on the COI itself, to confirm the policy’s active status and details. Key verification steps include checking that the policy effective dates are current and align with the project timeframe, ensuring the listed coverages and limits meet requirements, and confirming the names of the insured and certificate holder are accurate. Reviewing the COI for inconsistencies like mismatched fonts, handwriting, or blank fields on a standard ACORD form can also help identify potentially fraudulent documents.