Many business persons stumble upon a certificate of insurance once they land a new project or a job for their business. This certificate is usually required for a job where liability concerns and the chance of grave financial losses are high.
But what is a COI really? And how can such a certificate protect parties that are working together on a project?
What Exactly Is A Certificate Of Insurance?
A certificate of insurance, or COI for short, is a document that is legally binding and has all the vital insurance policy details.
It has a full policy snapshot in one form, which includes the most important aspects like:
- Name of the policyholder
- Policy effective date
- Coverage type
- Limits of the policy
This kind of policy is there to keep both you and your partners safe. It will allow you to sleep well, knowing that your bases are covered even if something bad happens.
Keep in mind that obtaining this certificate can be a slow process if you stick to the traditional way that involves a broker. This way, it could take days or even weeks.
However, fortunately, you can now do it all online. There are online services where you can secure your certificate of insurance in minutes. This way, you will get a digital certificate almost instantly without involving a broker in the process.
So, consider this option if you ever need a COI.
Why Would You Need A COI?
Certificates of insurance play a vital role for your partners and customers, as well as you.
From your perspective, as a business, being able to provide proof of insurance makes it easier for you to get into partnerships and grow your business. There is a small number of companies or customers out there who are willing to collaborate or work with a business that is uninsured.
Considering this, if your business is able to acquire a COI when necessary plays a huge role in the potential success of your business.
Keep in mind that you will have to request a COI from other companies too. For instance, if you are a construction company that often hires independent contractors to work on projects with your business, you most likely need to require proof of insurance from these businesses.
If your contractors make an error that causes your business losses or injuries and you have no coverage, you can easily get a lawsuit for the damages by the client.
4 Reasons Why A COI Is Vital
If you are still on the fence regarding this certificate, let’s place more focus on the main reasons why you should obtain COIs when working on high-risk projects.
- First of all, a COI proves the status of your insurance. It serves as a summary of an insurance policy and acts as proof of insurance.
- Next, it provides fast access to information. A certificate of insurance is made of an express variation of an insurance policy, and this convenience can potentially save you many hours of work every year.
- A COI also minimizes liability. When you document COIs from all contractors, you are setting yourself up for transferring loss to that contractor’s insurer in case something goes wrong.
- Finally, with a COI, you also protect your business when you decide to outsource. This kind of work brings various risks with it. So, perform due diligence and check each vendor’s insurance policy from the perspective of your insurance requirements, as this can save you from various situations that involve costly litigation.
Certificate Of Insurance Types
Let’s go through all the types of COI:
- Certificate of liability insurance. Consider this insurance not only to protect the project owner but also to extend extra protection to the manager and even a lender.
- Certificate of workers’ compensation insurance. This type should be necessary and put down on paper per the applicable state laws and statutes.
- Certificate of auto liability insurance. This one should be monitored for all non-owned, leased, vendor-owned, as well as hired vehicles.
How Much Does A COI Cost?
It shouldn’t cost you a dime to obtain a certificate of insurance as this is a complimentary service offered by the business that sold you your business insurance.
If your broker is charging you for providing a COI, it is time to move on and find a better option.
Final Words
Remember, a COI is often mandatory for a set of good reasons. You can never know when a disaster can happen. So, do your due diligence and obtain a COI whenever you are involved in risky projects.
