What is 'Certificate Of Insurance '

A certificate of insurance (COI) is a non-negotiable document issued by an insurance company or broker verifying the existence of an insurance policy and summarizing key aspects and conditions of the policy. For example, a standard certificate of insurance lists the policyholder's name, policy effective date, the type of coverage, policy limits, as well as other important details of the policy. 

BREAKING DOWN 'Certificate Of Insurance '

Situations, where liability and significant losses are of concern, require a certificate of insurance.  Small-business owners and contractors often have a certificate of insurance granting protection against liability for workplace accidents or injuries.  The purchase of liability insurance will usually trigger the issuance of a COI.

Importance of Certificate of Insurance

A certificate of insurance is often required for business owners and contractors to win contracts. Because many companies and individuals hire contractors, the client needs to know that a business owner or contractor has liability insurance and that they may not be held liable for damages, injuries, or substandard work.

Validating a Certificate of Insurance

Typically, a client will request a certificate directly from the insurance company, rather than through the business owner or contractor. The client should confirm the name of the insured on the certificate is an exact match for the company or contractor they are considering. Also, the client should check the policy coverage dates to ensure the effective date of the policy is current. Secure a new certificate if the policy is set to expire before the contracted work is complete.

Details of a Certificate of Insurance

A certificate of insurance contains separate sections for different types of liability coverage listed as general, auto, umbrella, and workers' compensation. “Insured” refers to the policyholder, the person or company who appears on the certificate as being covered by the insurance.

In addition to coverage levels, the certificate includes the policyholder's name, mailing address, and describes the operations the insured performs. The address of the issuing insurance company is listed, along with contact information for the insurance agent or the insurance agency’s contact person. If several insurance companies are involved, all names and contact information are listed. 

When a client requests a COI, they become a certificate holder. Name and contact information appears in the bottom left-hand corner along with statements showing the insurer's obligation, if any, to notify of policy cancellations.

The certificate briefly describes the insured’s policies and limits provided for each type of coverage. For example, the general liability section summarizes the six limits the policy offers by category and indicates whether coverage applies on a per claim or per occurrence basis. Because state laws determine the benefits provided to injured workers, the worker’s compensation coverage will show no limit. However, employer’s liability coverage limits should be listed.

RELATED TERMS
  1. Share Certificate

    A share certificate is a written document signed on behalf of ...
  2. Automatic Additional Insured

    Automatic additional insured refers to insurance coverage that ...
  3. Assessable Policy

    Assessable Policy is a type of insurance policy that may require ...
  4. Insurance Coverage Area

    Insurance coverage area refers to the geographic region in which ...
  5. Umbrella Insurance Policy

    An umbrella insurance policy provides extra liability insurance ...
  6. Against All Risks - AAR

    An against all risks insurance policy provides coverage against ...
Related Articles
  1. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  2. Insurance

    How To Easily Understand Your Insurance Contract

    Understanding your insurance contracts can go a long way in making sure that your advisor's recommendations are on track. Learn how to read yours today.
  3. Insurance

    An Advisor's Guide to Prof. Liability Insurance

    A guide to what financial advisors need to know about professional liability insurance.
  4. Insurance

    How To Invest In Insurance Companies

    Knowing the special circumstances that insurance companies operate under helps in evaluating whether or not a listed insurance company is a good investment and whether the economic environment ...
  5. Managing Wealth

    6 Insurance Policies That Protect the Wealthy

    Here are six types of insurance that the wealthy use to protect their assets.
  6. Insurance

    Bundle Your Insurance for Big Savings

    Bundling your insurance can save you money and time. Read on to see how to get the most out of multi-line insurance discounts.
  7. Insights

    What Is a Silver Certificate Dollar Bill Worth Today?

    Although a silver-certificate dollar bill no longer can be exchanged for silver, the date, grade and unique features make certain certificates very valuable.
  8. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  9. Insurance

    Life Insurance Policies: How Payouts Work

    Learn how to file for a life insurance payout, how long it takes to receive it, and new ways to plan for payments that provide an income stream.
  10. Insurance

    The History of Insurance in America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  2. Can an Insurance Company Deny Coverage?

    Insurance isn't always as straightforward as other products, and insurers can deny coverage in many different instances. ... Read Answer >>
Trading Center