If you have never been asked to provide a Certificate of Insurance (COI) for your small business before, that first request can be confusing. What you are really being asked is to show proof of insurance. Fortunately, if you have business insurance, obtaining a COI is pretty simple.
A COI is a simple document issued by your insurance company to someone who wants to verify your insurance coverage. The certificate is requested if you are doing business on someone else’s property. This might be a homeowner, a business, a local government, or an organization. They want to make sure that if someone gets injured or property gets damaged as a result of your work, you have proper insurance to cover the claim.
What are the Parts of a Certificate of Insurance?
A COI is a one-page document that states your business name, your insurance company’s name, the type and amount of coverage you have, and the name of the Certificate Holder. The Certificate Holder is the business or person that asked for the COI.
Your COI also includes policy numbers and effective dates for the coverage listed. The Certificate Holder can use that information to initiate a claim if they believe your business is liable for something. If your insurance policy expires before your business with the Certificate Holder is concluded, you’ll need to provide an updated document when you renew.
Being a Certificate Holder does not mean the property owner is now covered under your insurance policy. If they require you to name them as an “additional insured,” call your insurance agent. You will have to add an endorsement to your policy to add them. Being an additional insured allows them to file a claim against your policy if they get sued on a matter that involves your business operations there. This is common for landlords to request from business tenants.
When Do I Need to Request a Certificate of Insurance from a Business?
You have the right to a COI from other businesses, both as an individual and as a business owner. If you are hiring a contractor or service company to do work at your home, requesting a COI is one way to confirm that the business is properly insured. If you are doing a joint venture with another business or allowing a business to operate on your personal or commercial property, request a COI.
If there is an incident that involves injury, property damage, or some other liability, that insurance information might provide the protection you need to prevent the entire claim from falling to you. Keep in mind that the COI needs to come from the other business’s insurance company. Look at the Certificate Holder section to make sure you are named and verify that the effective dates are current. Certificates are not something that a business owner can just keep on file and send out as needed. A unique COI should be issued by the insurance company or agent for every request.
Don’t hesitate to review the COI with your own insurance agent. They will confirm whether the COI verifies the right coverage for the circumstances. If the other business does not have sufficient insurance, you might not want to continue in your arrangement.
Do I Have Enough Coverage?
If your COI is ever rejected for any reason, call your insurance agent first. Your agent will have an easier time understanding the property owner’s objections or requirements for certain coverage types and amounts. The solution could be simple, even if it means updating your coverage to fit the owner’s needs. It’s also possible that the property owner’s requirements are unreasonable, and moving forward might not be in your best interest. An experienced agent will be able to help you determine if a change in coverage is the right plan.
Whether you are new in business or just trying something new off site, carrying the proper liability insurance will enhance your reputation. If your current agent is unresponsive to requests for COI, or doesn’t take the time to make sure you understand the kind of coverage you need to operate on someone else’s property, contact us. At Smyrl Insurance, we take an interest in your business so that we can educate, nurture, and empower you through insurance to set yourself up for long-term success. We can review your existing policies and make sure you have the right coverage for your business activities. We serve clients for commercial property, liability, workers compensation, and other business and personal insurance needs in Hatfield, Lansdale, Souderton, Harleysville, and throughout Montgomery County, Pennsylvania.
