In many states around the US, the presentation of a certificate of insurance (COI) is standard practice before anyone walks onto the job site. In fact, for the bidding of jobs in some places, COI is required just to submit the bid. This can range just from the bidder, the general contractor, to having a certificate of insurance from every subcontractor as well.
Why, however, are certificates of insurance so important?
It all starts with the risk that the property or business owner or new client faces from the contractor when they are on the job site. While working on the site, a contracting business puts the job site at risk of property damage, bodily injury lawsuits.
1) How does the COI help me?
For the most part, a COI is a way for you to get a job. Without one, you will have a much harder time bidding and obtaining jobs. With a certificate of insurance, your potential client can know for sure you have business insurance. As mentioned before, this will let them know that they (& you) will be protected in case of property damage or another issue.
2) How does a certificate of insurance protect the site owner from those risks?
In reality, the COI does not protect your job site owner from anything.
Why is it vital then?
It’s all about proof. Let’s take an example. Say that you get pulled over. When the cop comes up to your window s/he will ask for your driver’s license and proof of insurance. Though this is not the exact policy that you have, it’s proof you have it. It’s also the reason, you have to make sure your proof of insurance isn’t expired.
If it’s expired, how does the cop know you really insurance?
It works the same way with a certificate of insurance. It’s not the policy itself, it’s the poof you have it. However, on a COI you often have more information than you have on your car’s proof of insurance.
3) What goes on the COI?
The normal form to provide evidence of insurance is what’s called an ACORD Form or ACORD 25. On this document goes a summary overview of the amounts and types of coverage maintained by your insurance company. This covers things like:
- General Liability Coverage
- Commercial Auto
- Commercial Umbrella
- Workers Compensation
Further, it will go into detail about those coverage types by including the following about each:
- insurance company name
- policy numbers
- policy limits
- coverage limits
- effective date of the policy
- contact information for the insurance company
Additional lines of coverage can be added to the form as needed. Sometimes the client will ask that they are added to your certificate as a certificate holder or additional insured. This is common, especially on larger jobs or jobs owned by small business owners. Doing as they ask is fine and does not give them any legal rights. As we said, the certificate simply establishes that an insurance policy exists.
4) How do I get one?
With the understanding that they are vital in the general contracting industry, now it’s important to know how to get one. To begin, you need general liability insurance as well as any other types of insurance the bid or law requires you have. If you don’t have that, try to get a quote from places that offer free and online COIs.
If you already have insurance, you need to contact your insurance agency or insurance agent. They should be able to walk you through the steps of obtaining a certificate of insurance in the way that their company offers them.
That said, you should never have to pay for a COI. If you do, it’s time to find a new insurance company. May I suggest ContractorsLiability.com? We offer unlimited free and online COIs so that you never have to worry about waiting or paying.
Though they may seem pointless, a certificate of insurance is the only way to prove to a new client that you have the insurance policies that you claim to have. Through giving them a copy of your certificate of insurance you can not only say that you can do the job but that should something go wrong, you will be covered.
When looking at exactly what it does, it’s important to know it’s not a real insurance coverage itself. It’s proof that you have the right policy. When getting a COI, it will usually come on an ACORD Form 25 with a lot of information. This information will include the limits of coverage, policy coverage dates, and conditions of the policy among other things.
With the understanding of how it helps and what it is, you just need to get one. To do this, go talk to your insurance agency either on the phone or in person. They should be able to tell you how you can get one today and in the future without coming in. Should they charge or not offer one online, it may be time to look into a new insurance company.
If that’s the case, here at ContractorsLiability.com we offer unlimited, free, and online COIs so that you can get one when you need it and get right back to making money and getting new jobs.