What Is the Purpose of a Certificate of Insurance?

A Certificate of Insurance (COI) is a formal document issued by an insurance company or broker that serves as official proof of an active insurance policy. It summarizes essential policy details, confirming coverage is in effect. This document provides a concise overview of a policyholder’s insurance status, offering a quick, verifiable snapshot of coverage to interested parties.

Key Information Contained in a Certificate of Insurance

A standard Certificate of Insurance presents a single-page summary of crucial policy details. It identifies the “insured” (the policyholder) and their mailing address. The “certificate holder” is the entity or individual requesting the COI, such as a client, landlord, or vendor. The document also specifies the “insurance company” providing coverage and includes the “policy number.”

The COI lists the “types of coverage” in place, such as General Liability, Workers’ Compensation, Auto Liability, and Professional Liability insurance. It also shows the “policy effective and expiration dates.” “Coverage limits” specify the maximum amount the policy will pay for a covered loss.

Another element is the listing of “additional insureds,” individuals or organizations extended coverage under the policy, often for specific projects. This grants them protection against claims arising from the named insured’s operations. A “waiver of subrogation” may also be noted, preventing the insurer from seeking reimbursement from a third party after paying a claim. Finally, the COI includes a “cancellation notice” period, indicating advance notice the certificate holder would receive if the policy were canceled.

Primary Reasons for Requesting a Certificate of Insurance

Requesting a Certificate of Insurance serves as “proof of coverage,” verifying that a party maintains necessary insurance policies. This tangible evidence reassures clients, partners, and vendors that the insured has financial protection against potential liabilities. For instance, a contractor providing a COI demonstrates to a client they are insured against accidents or damages during a project.

COIs aid in “risk mitigation.” By reviewing another party’s insurance, a business can assess and reduce its own potential liability. If an incident occurs involving an uninsured or underinsured party, the requesting business might otherwise bear the financial burden. Obtaining a COI helps ensure financial responsibility for unforeseen events is appropriately allocated.

COIs are often required by “contractual requirements.” Many agreements, such as landlord-tenant leases or client-contractor agreements, stipulate specific insurance coverages and limits. The COI verifies these contractual obligations are met, ensuring compliance throughout the agreement.

Beyond contractual needs, COIs address “regulatory compliance” in industries with legal insurance requirements. For example, some construction projects or public services may have regulatory mandates for liability coverage. Providing a COI confirms adherence to these regulations. A COI provides peace of mind, fostering trust and enabling smoother business relationships.

Steps to Obtain and Confirm a Certificate of Insurance

For an insured party needing to provide a COI, the process begins by contacting their insurance broker or agent. Clearly communicate all necessary details for the certificate, including the certificate holder’s full legal name and address, specific types of coverage and limits, and any special endorsements like additional insured status or a waiver of subrogation. Providing these details accurately ensures the COI reflects the requesting party’s exact requirements. Most insurance providers can issue a COI promptly, often within one to two business days.

When receiving a COI, the certificate holder should review the document for accuracy and completeness. Verify:
All required parties are correctly listed, especially if additional insured status was requested.
The types of coverage and limits meet contractual or regulatory requirements.
The policy’s effective and expiration dates ensure continuous coverage throughout the relevant period.

To confirm the certificate’s authenticity and current status, contact the issuing insurance company or broker directly using publicly available contact information, not just the details on the COI itself. This verification ensures the policy is active and the information is genuine. Look for discrepancies like inconsistent fonts, misspellings, handwritten alterations, or unfamiliar insurance company names. A legitimate COI is often issued on a standardized ACORD form as an indicator of validity.