What is a certificate of insurance (COI)?
A certificate of insurance is a document issued by an insurance agent to verify that insurance coverage is in place. The certificate summarizes essential information about an organization’s insurance coverage and is used as proof of coverage for informational purposes.
When is a certificate of insurance needed?
In today’s world, lawsuits are an unfortunate part of life. A certificate of insurance is often required as part of a business arrangement between two parties. The certificate clarifies whose insurance will respond in the event of an incident or a loss. For example, if you rent a hall for the purpose of holding a dance party, the owner of the hall will ask you for proof of insurance so that if an accident should occur, or if there is damage to the hall, they will not be held liable for injuries and their insurance will not have to pay for the repairs. If you hire a contractor to repair your roof, you should ask them for proof of insurance so that in case of negligence or poor workmanship, or if one of their employees is injured, you cannot be held liable and your insurance premiums will be protected. In the absence of a contract, you should at least have a certificate of insurance.
What is included on a certificate of insurance?
The certificate of insurance lists the entities (person, business, organization) covered by insurance, the insurer providing coverage, a policy number, the start and end dates of the coverage, the activities and locations permitted under the coverage, the type of insurance purchased and the dollar amount (limits) of applicable coverage. The certificate may also contain more details about additional insureds, specific exclusions to the coverage, and clauses or limitations to the policy.
A certificate of insurance cannot take the place of an insurance policy and it cannot be used to alter or expand coverage. It is important to note that there is no contract of insurance between the listed insurance company and the certificate holder (the person who has requested the proof of insurance). In fact, most certificates state that there are no rights conferred upon the certificate holder. In order to gain protection under a third party’s certificate, the certificate holder must be named as an additional insured on the certificate of insurance.