Why is a certificate of insurance important?
Asked by: Prof. Jamey Swift | Last update: April 20, 2025Score: 5/5 (30 votes)
What is the purpose of a certificate of insurance?
A certificate of insurance (COI) is issued by an insurance company or broker and verifies the existence of an insurance policy. Small business owners and contractors typically require a COI that grants protection against liability for workplace accidents or injuries to conduct business.
Why is coi important?
At its core, the purpose of a COI is to provide documented evidence that a vendor has insurance coverage in place. COIs allow you to verify your vendors' type of coverage, policy limits, and effective dates, ensuring their compliance with your requirements and contractual obligations. They help mitigate your liability.
What if I don't have a certificate of insurance?
Without a COI, businesses may be reluctant to do business with you. That's because if something goes wrong and you don't have the proper insurance coverage in place, you could be held liable.
Why do customers ask for a certificate of insurance?
Both businesses and individuals ask for certificates of insurance. They do so in order to verify that someone has an adequate amount of insurance coverage in place to protect their business and assets.
Certificate of Insurance | What Is It?
Why would a vendor request a coi?
COIs and AIs
Third parties typically request a COI to ensure a vendor has adequate insurance coverage before entering into a contract or allowing them to participate in an event. These third parties are known as Additional Insureds (AIs).
Who holds the certificate of insurance?
A certificate holder is the business or person who receives the COI from the policy holder. The insured — or their insurance company — will provide the COI to the certificate holder as a way to prove they have sufficient insurance coverage for the job.
How much does a certificate of insurance cost?
A certificate of insurance is free. Much like a receipt, the document is proof that the policyholder paid for the policy and has insurance. The cost of the policy depends on the type of insurance, your policy limits, and business factors, such as revenue and number of employees.
Are COIs legally binding?
If a third party is slow or hesitant in providing a COI, it could be an indicator that they are underinsured or not insured at all. A COI is a non-binding document and does not alter coverage.
How hard is it to get a certificate of insurance?
Obtaining a COI from a third party should not be too difficult a task on your end, as they'll be the ones taking the steps above. To ask for a COI, you can generally send the party you're wanting to work with a certificate of insurance request letter or email or even ask them in person if you'd like.
What is the benefit of COI?
A certificate of insurance is much more than just a document. It offers tangible benefits for your business, including proof of coverage, contract compliance, enhanced reputation, streamlined processes, peace of mind, and fosters the ability to build trust and relationships.
Why do we use COI?
It answers the questions “qui?” (who?) or “quoi?” (what?) and COI stands for Complément d'objet indirect. It is an indirect object in a sentence that indirectly receives the action of the verb, usually introduced by a preposition.
What type of information is not included in a certificate of insurance?
A certificate of insurance provides proof of coverage but does not include information about the cost of premiums. Specifically, details about filing claims, policy benefits, exclusions, and the duration of coverage are also not included.
Who needs to provide coi?
A certificate of insurance (COI) is a must-have document that proves you have insurance as a contractor. COIs are usually a requirement on every construction project. If you're hiring subcontractors, you should always require them to submit their own COI so you're protected against liability.
Which of the following is a benefit of a coi?
Whether you are a business owner, contractor, or professional, having a valid COI can help establish trust and assurance with your clients and partners. It is an important tool that showcases your commitment to managing potential risks and protecting against unforeseen circumstances.
What is the purpose of the certificate of coverage?
The CoC details the health benefits the beneficiary and their dependents have under their plan. Details include exclusions and conditions. Exclusions are uncovered services, and conditions are actions needed to receive benefits.
Is a COI confidential?
Benefits of a COI
They are convenient, providing basic information and evidencing that coverage existed during a particular time. Without divulging confidential business information, a COI can provide enough information for the association to file a claim, if necessary.
What is the difference between a COI and an insurance policy?
While the COI provides a summary of coverage, the insurance policy itself is the binding agreement that details the extent of this protection.
Do you need a COI for moving?
Most people probably will go their whole life without having to worry about a COI. The primary reason for getting a moving COI is because your apartment complex requires it. Many apartment buildings will not let movers onsite without an approved COI. Some won't even let you reserve an elevator without it!
Why would you need a certificate of insurance?
Usually no more than one page, a COI provides a summary of your business coverage. It serves as verification that your business is indeed insured. Potential clients may request a COI as a condition of doing business with you.
Do COIs cost money?
Many people still have lots of questions about COIs, including what they do and the costs associated with them. Thankfully, while insurance policies have a cost tied to them (in the form of monthly premiums), COIs do not and are usually free to request, issue, and use.
How long does it take to get a coi?
If the policy fits the requirements, it should take less than a day, however if the policies do not match then this process can take up to 3-4 days until you receive the new certificate. At times this can take longer if there is a lot of back and forth between you, your insurance agent and the client.
When should I ask for a certificate of insurance?
Always request a COI from a contractor before they commence work on your project. The COI should be obtained before entering into business with the new third party. Simply ask them to provide a copy from their insurance carrier, who should supply it for free.
What is another name for a certificate of insurance?
A COI - also known as a certificate of liability or proof of insurance – not only verifies that you are insured, but also summarizes what is covered.
Who signs a certificate of insurance?
Certificate holder: entity for which the evidence of coverage is being provided. Producer's signature: signature of the Insurance Agent/Broker who issues certificates.