If you’ve ever been asked for a COI and weren’t sure what it meant, you’re not alone. A certificate of insurance (COI) is one of the most common insurance documents used in business and personal transactions. It’s a way to verify an active insurance policy and its coverage details.
What is a certificate of insurance?
A certificate of insurance (COI) is a document that’s issued by your insurance provider that serves as official proof of insurance. It verifies the existence of an insurance policy and summarizes its key aspects and conditions without requiring you to share your entire insurance policy contract.
Businesses often use COIs to show proof of coverage before signing contracts or entering into new business relationships. In many industries, it’s standard practice to require a COI as part of vendor onboarding, lease agreements or client engagements.
Breaking Down the Components of a COI
A COI can confirm essential insurance policy information, including the effective date, types of coverage and policy limits. In the context of professional liability insurance, the COI may also describe the range of business operations that are covered by the policy.
A certificate of insurance typically includes:
- Policyholder information
- Policy number
- Date issued
- Effective and expiration dates
- Coverage limits and deductibles
- Contact information for your insurance provider
- If applicable, any additional insureds
The COI’s Role in Business Transactions
The COI is not a document to be filed away and forgotten. It can play a crucial role in business transactions, serving as a sort of gatekeeper when initiating new business ventures such as projects, partnerships or office leases. Providing a COI helps build trust in your business operations, along with assurance that you meet legal, regulatory and contractual coverage requirements.
How to Obtain a Certificate of Insurance
Once your business has an active insurance policy, requesting a COI is usually a simple process. Most COIs can be issued by your insurance broker or carrier at no additional cost, assuming that your account is current.
Additional Insureds on Your COI
Sometimes, businesses or individuals that your organization works with will request to be named as an additional insured on your policy. Typically done through an endorsement to your policy, this extends coverage to the involved party, allowing them to make certain types of claims under a policy that they did not personally purchase.
It’s important to note that those who are named as additional insureds may not receive the same level of coverage as the primary policyholder. The scope of their coverage is based on the specific terms of the endorsement. Keep in mind that these endorsements might also generate an additional premium charge.
Because additional insured endorsements can impact your liability exposure, it’s important to review them carefully and consult with your insurance advisor before making changes to your policy.
Is your business protected?
Certificates of insurance can play an important role in helping businesses meet their risk management and contractual requirements. Whether you’re requesting a COI or evaluating whether to add an additional insured, having a trusted insurance advisor can make all the difference.
At Higginbotham, we help businesses navigate their insurance needs through tailored coverage and risk management strategies. To learn more about how Higginbotham can help protect your operations and support your long-term business goals, speak with one of our commercial insurance specialists today.
