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What is a certificate of insurance (COI)?

Fact-checked with HomeInsurance.com

If you are in business, you may have heard the term “certificate of insurance.” And if you own a business, and you work with other businesses or corporations, you may have had to supply one to a partner or client in the past. 

But if you are unfamiliar with the term, you may be asking the following questions: “what is a certificate of insurance? How does it impact your business? Where can you find out how to get a certificate of insurance?” This article offers the answers to these and other questions to help you understand more about a certificate of insurance. 

Certificate of insurance (COI) defined 

A certificate of insurance (COI) is a document that tells a client, vendor or potential partner that you have adequate insurance — especially liability insurance — for your business. It is supplied by your insurance company at the request of you or someone with whom you are doing business.

If you are initiating a project or job opportunity where there might be liability concerns, your partner or client may ask you for an insurance certificate to verify they are protected. For example, if you own a cleaning company and are being hired by a large industrial site to provide a cleaning service, they may ask you for a COI. This would protect them from liability in the event one of your workers is injured while at the facility. 

Who needs a certificate of insurance

A certificate of insurance form may be needed if you are a business owner (or the business manager of a company) who works with other corporate entities or even individuals. Most often, this applies to businesses with greater liability — such as specialty contractors, like electricians, window cleaners, welders, roofers or gutter cleaners.

As the primary or general contractor on a building site, for example, you might ask for a COI from the company that is doing the electrical work on the building. A COI would prove that if an electrician is injured, you won’t be liable for their medical costs.

How to validate a certificate of insurance

The best practice when dealing with a certificate of insurance is to ask for it directly from the insurer or the company’s insurance broker, rather than the company you’re doing business with. Carefully review the document to ensure that the company name, name of the insurer, policy dates and limits of coverage are accurate to your knowledge. Pay special attention to dates: you do not want coverage to expire before the completion of your joint project.

A COI does not include all the language on the original policy documents, or any exclusions or conditions of the coverage. It is not a contract or a legal document. It’s a way of streamlining the process of proving you have insurance, as it is far easier to provide a simple COI than it would be to hand over all your policy documentation to a company you’re doing business with. 

If you are not satisfied with the amount of liability coverage indicated, you can discuss with the company in question. They might then go to their insurance broker to increase coverage to a level determined appropriate for the job or project you’re working on together. 

If you are the one asking for a COI, you are called the certificate holder. Your name, business name and contact information will appear on the document, usually in the lower left hand corner. Make sure your information is correct.

Another phrase you may see on a COI is “additionally insured.” This refers to others who are covered under the policy in addition to the primary policyholder. This may happen when a company owns more than one sub-company and all are covered under a single policy. 

How a certificate of insurance works

The first thing to understand about a COI is that it does not extend insurance coverage to the certificate holder. There is no increased level of insurance available just because someone has requested a COI. It is an informational document only, and does not indicate a change in the policyholder’s coverage.

A COI could be considered somewhat like the insurance card that you present if you’re in a car accident. It has information about your coverage, but does not in and of itself allow for any changes in coverage. It is merely legal evidence of an existing policy. Likewise, a COI is just a statement of the existing coverage and proof that you have insurance. 

In general, the COI would be asked for at the beginning of a project or work relationship. The certificate holder would keep it filed with other business papers, and review it periodically. If the policy dates expire prior to the end of the working relationship, a new one should be obtained. 

If an accident that results in medical or other costs occurs, the document can be produced to show that the company doing business with the certificate holder is covered for those costs.

The takeaway: 

  • A certificate of insurance (COI) is a document created to prove that a subcontractor or business partner has liability insurance.
  • It is generated by the company’s insurer, and given to the certificate holder. 
  • The certificate holder is the person or company doing business with the subcontractor or other corporate entity.
  • If there is an accident resulting in a liability claim, the COI can be presented to prove coverage.

A certificate of insurance (COI) is a document that is created for businesses that intend to do business with another entity — a client, business partner or subcontractor. The latter supplies a COI to the former to prove that they have an appropriate amount of coverage to handle any claims that might be made during the course of the business relationship.

Mary Van Keuren

After 30 years as a writer and editor in academia, Mary now writes full-time for the insurance and finance industries. Her work has appeared on Reviews.com, TheSimpleDollar.com and Bankrate.com, as well as other consumer-focused websites.

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