What is a Certificate of Insurance and Do I Need One for My Business?

What Is a certificate of insurance
If you operate as a business, then you need to understand what a COI is, and whether or not you’ll need one. Here's what you need to know for your business.

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If you own or operate a business in Arkansas, then you need to understand what a COI (Certificate of Insurance) is, and whether or not you’ll need one. In this post, we’re here to help you understand everything you need to know about certificates of insurance for your business.

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Do you need a Certificate of insurance for your company?

A Certificate of Insurance will be issued by an insurance company or an insurance broker. It can verify that you have commercial coverage in place and provides a summary of your coverage and policy limitations. Without it, you might find it challenging to secure contracts and clients.

Any business that performs and provides a service, no matter the level of risk liability, needs to get a Certificate of Insurance.

One client may not request to see it, but another client may require this proof at the time of bidding or during any initial contract discussions. If your client asks for proof that you’re insured, you can’t be expected to carry around copies of your insurance documentation, and this is why you need a COI.

What is a Certificate of Insurance (COI)?

Much like an auto insurance ID card, a Certificate of Insurance for your business can prove you carry insurance. It also summarizes your business insurance coverage details.

A Certificate of Insurance will show:

  • Who is covered – Inc. the policy holders name and mailing address
  • A description of the type of work the ‘insured’ performs
  • What is covered
  • Policy numbers
  • The start and expiration date of your coverage
  • The coverage amounts and policy limits
  • Contact information for the insurance agent or the agency’s point of contact

What is a COI request?

If you are bidding for a project or applying to work on a job with specific liability concerns, your partner or client might make a COI request.

This is an easy way to prove you had adequate insurance coverage in place, and it can give your clients or business partners peace of mind before they decide to do business with you.

If you rent an office space, your landlord may ask to see a COI before signing the lease.

The Benefits of Getting a COI

Most business owners will not want to carry around extensive insurance documentation. It’s not convenient, nor is it secure. Instead, getting a Certificate of Insurance is a much more convenient choice.

  • It’s compact and easy to carry around
  • It can increase a client’s confidence in your business
  • It is quick and easy to obtain

How much does it cost to get a Certificate of Insurance?

It doesn’t actually cost anything to get a COI issued. Almost all insurance companies will provide you with a Certificate of Insurance upon request. If the job you are applying for requires a higher level of coverage than is listed on your policy, you might need to pay an additional premium to cover the cost of increasing your policy limits.

Should I ask my contractors and suppliers for a COI?

Yes. In order to make sure the companies or individual contractors you work with have the right insurance coverage in place, you need to ask to see a COI. As best practice guidance for checking a contractor’s certificate of insurance, here are a few important things you should do.

  • Contact the agent/insurer on the COI for authentication.
  • Ensure the coverage limits are adequate, along with expiration and effective dates
  • Make sure the individual business, contractor, or subcontractor name on the COI matches exactly to the company you are doing business with.
  • Always keep a record of the time and date of any calls made, along with a record of whom you spoke with.

How can you get a Certificate of Insurance for your Business?

If you need to apply for COI, there are a few typical steps to follow.

1. Make sure you double-check with the individual who has made the COI request as to what policy minimums/limits should be in place?

TIP: If possible, try to obtain the name, address, and tax identification number for your client, just in case you need to increase your premium. This could save you from facing unwanted delays or being refused a job because you don’t have enough coverage in place.

2. Contact your insurance broker and tell them what the coverage requirements are. If your policy already meets these needs, then they will contact your insurance carrier in order to secure and get a COI issued. If you need to increase your policy limits or purchase a commercial umbrella policy to extend certain liability limits, then they will be able to provide you with a quote.

3. Once the above has been taken care of and confirmed, your insurance broker will be able to create a Certificate of Insurance and mail a printed copy of your COI.

4. You will usually be required to mail the COI to your clients in order for them to verify your coverage.

How long does it take to get a COI issued?

Although the process seems quite straightforward, in some cases, it can take anything between a few days up to a couple of weeks to get a Certificate of Insurance issued.

There are lots of variables to consider, including how fast you can reach your commercial insurance broker, and how long it takes them to complete the paperwork for your COI.

If you use a number of insurance carriers for your different commercial insurance needs, this can also prolong the process.

Key Takeaways

Without a COI, you may have difficulties in securing clients or even rental space for your business.

If you can’t immediately show this proof of adequate and proper coverage, a hirer will most likely look to the next candidate, as they will not want to take a risk, in the event that something happens.

Small-business owners will often have a COI granting protection against liability for workplace accidents or injuries.

When you purchase your insurance, you will most likely be issued the COI.

If not, make sure you request it!

If you wait until you are asked to provide a Certificate of Insurance, and the process takes longer than expected, you could miss out on a project and potentially lose revenue for your business.

You have an increased chance of winning your next client or bid if you can instantly demonstrate your proof of insurance by having a COI to hand.

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