What is a Certificate of Insurance Form and How to Read One?

When hiring a company, you want to know that it is not going to increase your legal liability. And similarly, when someone hires your company, you want to be able to show that you won’t increase their liability. However, while most business owners are honest, sadly some are not. This is why asking for or being willing to provide a Certificate of Insurance, or COI, is important.

A Certificate of Insurance (COI) form, sometimes referred to as an ACORD certificate of liability insurance form, is a document that shows proof of insurance and includes your insurance policies, coverage limits, and policy effective dates. This gives proof of adequate insurance coverage and is good business practice to ask for to ensure coverages are accurate to what you’ve been told.

What Parts Make Up a Certificate of Insurance Form?

While there is not a standard format for a certificate of insurance form, ACORD (Association for Cooperative Operations Research and Development), provides a form that most insurers and agents use. This form includes the following:

• Date the form was issued
• Disclaimer that summarizes the nature of the certificate form
• Insurance agent or brokers name who issued the certificate
• The insured’s name(s) and address(es)
• Insurance coverages, policy numbers, effective and expiration dates
• Insurers providing the coverage listed above
• Limits of liability that each coverage provides listed in dollars
• Description of operations, locations, and vehicles
• Certificate holders name or company name
• Cancellation details that specify the certificate holder will be notified if the insured cancels the policy before the expiration date
• Signature of the insurance agent or authorized representative

How to Read a Certificate of Insurance

If you request a Certificate of Insurance from an individual or company, you want to verify it’s accurate and valid. Here’s what to look for:

• Make sure the business name matches the name of the business you are looking to hire.
• Make sure that the policy expiration date does happen before the expected completion date of the project. If it does expire before the completion date, you’ll want to ask the individual or company to submit another COI that confirms the renewal of the policy.
• Two policies that most all companies should have and you should look for is general liability insurance and workers’ compensation insurance. You’ll also want to look for additional policies that are important for the project being completed. If you are unsure what coverages to look for, your insurance agent is ready to help!
• For coverage limits, you’ll want to make sure they meet or exceed your limits. If they do not, you should consider asking them to purchase additional insurance for the project.
• If you doubt the authenticity of a COI you’ve been provided, request one directly from the company’s insurance agent or broker.

When is a Certificate of Insurance Necessary?

Certificates of Insurance are broadly used in the business world whenever parties are concerned with liability, which most companies should be. Here are a few examples of when a COI is needed:

• A design company wants to protect itself from bringing subcontractors onto the building job site.
• An engineering firm is asked for a COI by a government before doing construction on a road project.
• A property owner asks for a COI from a new tenant, to ensure coverage is in place in case of a fire, break-in, or injury to a visitor.
• A bank requests a COI before accepting collateral pledged against a loan.

As you can see, knowing the basics about certificate of insurance forms is an important part of doing business. This will help protect you and your business from the unexpected. If you have questions about Certificate of Insurance (COI) forms or would like to inquire about insurance for you or your business, please contact us today!