Understanding Certificate Of Insurance

Being insured protects your organization from the various threats and risks that it may be vulnerable to. However, when your company enters into a partnership with another or hires a subcontractor, simply being insured may be insufficient. If either party is not properly insured or has inadequate insurance coverage, the partnership can collapse due to the heightened level of risk involved. To prevent yourself and your entire organization from encountering such obstacles, a certificate of insurance is highly important.

What is a Certificate of Insurance?

A certificate of insurance (COI) is a document, either printed or digital, that proves your organization’s insurance coverage. While a COI can be produced for any type of commercial insurance, they are most often required for workers’ compensation or general liability insurance. The document details your organization’s insurance policy, including elements of your policy such as:

• Company name
• Insurance provider name
• Type of commercial insurance
• Policy number
• Policy effective date
• Insurance policy limits

The COI is conclusive evidence of your business being insured, giving your potential partner more reassurance and confidence before entering a business agreement with you, rather than having a deal crumble apart last-minute.

Are Certificates of Insurance Necessary?

Whether you need to provide a certificate of insurance when entering a partnership depends on the role your business plays concerning the other business you are working with. For example, if you are a subcontractor or vendor providing services on a contractor’s behalf, you should provide a COI. On the other hand, if you are hiring a subcontractor or vendor to provide services on your business’ behalf, you should receive a COI from those during the bidding or agreement processes. The subcontractor should be comparably insured to your organization as the hiring company, ensuring that their insurance can cover your costs when sustaining damages.

Providing Certificates of Insurance to Stakeholders

Stakeholders working with your business such as vendors and clients will frequently ask your organization for a COI before working together, to confirm that your organization has the proper coverage to reduce possible risks. Receiving a COI from a business makes stakeholders more reassured that they can safely enter a partnership. On the other hand, stakeholders are more hesitant to deal with a business that cannot produce a COI, losing you business.

How to Acquire a Certificate of Insurance

You can typically acquire a COI from your commercial insurance provider free of charge by simply contacting them with your request for a COI. Some details you will need to provide include the name and address of the hiring company requesting your COI, and their insurance requirements. If the coverages align, your insurance agent will then provide you with the COI for your hiring company. Alternatively, if your coverages are insufficient, you can purchase the additional insurance coverage to produce the COI.

Commercial Insurance Must-haves

A certificate of insurance can protect a hiring company before any damages are sustained. However, when you file a commercial insurance claim, public adjusters are what will protect you when damages are incurred. Contact us at Stone Claims Group to learn more about how we can assist you in insurance matters.