What is a Certificate of Insurance?
A Certificate of Insurance (COI) is an official document delivered by an insurance provider that outlines the essential elements of an insurance policy. The primary function of a COI is to serve as proof that an insurance policy exists and to summarize the key aspects of the coverage. This typically includes:
- Coverage type: General Liability, Property, Workers’ Compensation, etc.
- Policyholder: The insured individual or entity.
- Effective dates: The start and end dates of the policy coverage.
- Limits of coverage: Maximum amount the insurer will pay under each coverage type.
- Additional insureds: Any third parties covered by the policy.
Examples
-
Commercial Lease Agreement: In a commercial lease, the landlord may require the tenant to carry General Liability insurance and add the landlord as an additional insured. The tenant must then provide a Certificate of Insurance to certify their compliance with this requirement.
-
Construction Contracts: A general contractor may need to supply a COI to the property owner before starting a project, demonstrating that they have adequate liability and workers’ compensation insurance in place.
-
Event Planning: Event organizers may need to provide a COI to a venue to prove they have liability insurance that covers potential damages or injuries during the event.
Frequently Asked Questions (FAQs)
Why do I need a Certificate of Insurance?
A COI provides proof of insurance coverage and can be essential for meeting contractual and legal obligations. It assures involved parties that you have appropriate insurance coverage to mitigate potential risks.
How can I obtain a COI?
A COI can be obtained from your insurance company or broker. You must request the document specifically, providing details about the parties involved and the type of coverage required.
Who typically requests a Certificate of Insurance?
COIs are commonly requested by landlords, property managers, contractors, event venues, and clients to whom services are provided. They ensure the requesting party is covered in the event of a loss.
Are there different types of Certificates of Insurance?
The form and content of a COI may vary based on the type of insurance it verifies. Different industries may also require specific information or endorsaris.
What information is included in a COI?
A COI usually includes the policyholder’s name, type of insurance, coverage dates, policy limits, and the insurance provider’s name and contact information. Additional insured parties are also listed if applicable.
Related Terms
- Additional Insured: A person or entity added to an insurance policy, extending coverage to them under the insured’s policy.
- Binder: A temporary insurance contract that provides proof of coverage until a formal policy is issued.
- Liability Insurance: A type of coverage that protects against claims alleging that the policyholder’s negligence or inappropriate action resulted in bodily injury or property damage to another party.
- Indemnity: Protection or security against legal liability for one’s actions.
Online Resources
- Investopedia: Certificate of Insurance
- IRMI: Certificate of Insurance Guidelines
- Insurance Information Institute (III): Business Insurance Basics
References
-
Insurance Information Institute. “Business Insurance Basics.” Insurance Information Institute.
-
“Understanding Certificates of Insurance.” International Risk Management Institute (IRMI).
Suggested Books for Further Studies
- “Commercial General Liability: The New Claims-Made and Occurrence Forms” by Donald S. Malecki and Arthur L. Flitner
- “The Insurance Professional’s Practical Guide to Workers’ Compensation: From A-Z” by Chris J. Boggs
- “Insurance - Principles and Practices” by Ralph H. Blanchard
