A certificate of insurance (COI) is a physical or digital form that provides an overview of the core details of your business insurance coverage. It covers information like the coverage types your policy includes, who it covers, and how long it will remain active. COIs typically condense relevant information into a single page, and you may be able to request a copy online in as little as a few minutes.
Presenting a COI is a critical way to show your business is committed to safety and financial security, and it may be necessary to bid for a contract, rent or lease commercial property, raise money, or secure a professional license. The certificate of insurance itself is usually available free of charge—but you’ll of course need to pay for the insurance policies it lists.
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What is a certificate of insurance?
A certificate of insurance is a document that summarizes a business insurance policy, including the level of coverage provided, the length of the coverage period, and the people or entities that are covered. While it doesn’t contain all the details found within the full policy documents, a COI at least offers the basic information needed to prove that an insurance policy exists and provides relevant coverage.
What information is included on a certificate of insurance?
Let’s dive deeper into each of the major pieces of information that may appear on a typical certificate of insurance for business owners.
Named insured
COIs include the name and address of the policyholder, which generally refers to the business or individual who pays for the policy and is the main recipient of its coverage. The document may also list any additional insureds—or entities that are eligible for coverage despite not paying premiums or being the primary policyholder, such as a general contractor added to a subcontractor’s general liability insurance policy.
Insurance company
A certificate of insurance documents the name and contact information of the insurance company issuing the associated commercial insurance policy.
Types of insurance
To confirm the level of coverage the policy provides, a COI may list the coverage types that the policy includes. Here are examples of the types of business insurance you may see on your certificate of insurance form:
- General liability insurance
- Workers’ compensation or employer’s liability insurance
- Commercial auto insurance
- Commercial property insurance
- Commercial umbrella or excess liability insurance
- Professional liability insurance (also known as errors and omissions insurance)
Policy number
A policy number is a unique code used to identify a given insurance policy and distinguish it from other policies—meaning it can also be used to definitively link a COI to an insurance contract that shares the same policy number. Policyholders may be able to check the status of their coverage or any active claims by inputting their policy number into their insurer’s online portal.
Effective and expiration dates
On your certificate of liability insurance, you can find the associated policy’s effective and expiration dates—which simply indicate the beginning and end dates of the policy’s coverage period. If you request a COI from a commercial partner, you may want to make sure their policy will remain in effect at least through the duration of your partnership with them.
Coverage limits
In addition to presenting the number of coverage types included in the policy, a certificate of liability insurance will typically go over the maximum amount of coverage available for each type of claim—giving relevant stakeholders a clearer picture of the degree of financial protection they can expect in the event of a costly accident or lawsuit.
Certificate holder
The certificate of insurance not only lists the policyholder and other insureds covered by the policy, but it also includes the name and contact information of anyone who requests a copy of the COI—these are known as certificate holders. Though certificate holders don’t have access to coverage under your policy, you may be required to inform them if you cancel your policy.
Description of operations
Standard certificates of insurance may also include a “description of operations” section that documents various details about how you conduct business, such as how many vehicles are covered by your commercial auto insurance and whether a waiver of subrogation applies to your business insurance coverage.
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What is an ACORD 25 certificate of insurance?
The ACORD 25 COI is a standardized certificate of liability insurance form developed by the Association for Cooperative Operations Research and Development. It’s the most common type of certificate of insurance among most insurance agents and brokers. While the ACORD 25 form can document various types of commercial liability insurance, you may need a separate ACORD 28 form to show proof of commercial property insurance.
When does a business need a certificate of insurance?
Depending on your circumstances, several different types of people or organizations could request a business certificate of insurance verifying that you’re insured. Keep reading for examples of situations when you may need a COI:
- Governmental organizations: If you’re bidding for contract work with a local or state government, you may need to show a certificate of insurance to ensure that the governmental entity won’t be liable if you’re responsible for injuring someone or damaging their property. As a result, COIs are pivotal for people working in construction, landscaping, and other trades that participate in contract bidding.
- Investors and lenders: Before providing funds for your startup, prospective investors or lenders may want to see proof of insurance coverage. If you don’t have proper coverage, your business could fold in the event of a massive lawsuit or severe property damage—which may make for a risky investment or loan.
- Clients: Sometimes, clients or customers won’t agree to do business with you unless they know you have an insurance policy that can protect them from potential out-of-pocket losses. For example, someone who wants to host a party at your restaurant may first want to see a COI to confirm that their guests will be covered if they are suddenly injured or become sick on your property.
- Landlords: You may need to show proof of insurance before you can sign a commercial property rental agreement, since landlords will want to make sure you can maintain strong financial health and continue to make rent payments even after a costly liability or property damage claim.
- State licensing agencies: Depending on your industry, you may be required to present proof of commercial insurance to obtain a professional license. For example, in some states, you must have general liability insurance to receive a real estate license.
Why do clients and other businesses ask for a COI?
Clients or business partners may request a COI from you to determine whether you’re fiscally responsible and able to cover their losses in the event of an unexpected mishap. For example, a prospective client may want to make sure that a consultant has professional liability insurance before paying for their services—that way, they can know that they’ll be covered in case they lose money after receiving bad advice.
A certificate of insurance can also help validate that a potential business partner is compliant with all relevant legal requirements. For example, commercial auto insurance is required by law in most states, so another company may want to see a certificate of auto liability insurance confirming that your vehicles are covered in accordance with your state’s regulations before entering into a contractual relationship with you.
Certificate holder vs. additional insured: What’s the difference?
Although both may be listed on your COI, certificate holders and additional insureds have different privileges under your insurance policy. A certificate holder is anyone who requests a copy of your COI, and they may have a right to be informed when your policy is renewed, canceled, or otherwise changed. Conversely, an additional insured is someone who is eligible for coverage and can file a claim on your policy for covered losses.
Certificate of insurance vs. proof of insurance
Proof of insurance refers to any document that can be used to verify that a business is covered by an appropriate insurance policy—potentially including an insurance card, a copy of the declarations page, or the full insurance policy itself. However, a certificate of insurance is generally the best way to show proof of coverage, since it summarizes the most important information about your policy while still being short and fairly quick and easy to obtain.
How to read a certificate of insurance
COIs include a lot of information that may be difficult to parse through, so to make sure you and your business partners or clients are adequately covered, you need to confirm the following details as you read over a certificate of insurance coverage:
- The policy’s coverage period overlaps with the window of time during which you’ll need coverage
- The COI is associated with a legitimate insurance carrier that can be trusted to pay out claims in the event of covered losses
- The policy includes the correct coverage types to protect against the most common risks facing your business venture
- The policy has high enough liability coverage limits to ensure a complex lawsuit won’t put your company or a partnering company out of business
Certificates of insurance at a glance
- Meaning: In business insurance, a COI is a certificate that summarizes important information about a commercial insurance policy and the businesses and individuals with a stake in that policy.
- Purpose: The main function of a COI is to show proof of insurance, which may be necessary if you’re trying to rent property, attract investors, land a contract, or earn a business license.
- Information: Several details may be included on your certificate of insurance, such as the name and contact information of the insurance company and all insured parties, the policy’s effective and expiration dates, and the coverage types and policy limits included within it.
- Certificate holders: Your COI will list the names of certificate holders, which are people or entities that request a copy of your certificate of insurance as proof of coverage. You may be required to notify certificate holders whenever your coverage changes.
- Additional insureds: You may also find the names of additional insureds listed on your certificate of business insurance. Additional insureds don’t have to pay premiums but are still allowed to file a claim on your policy if they experience a loss that it covers.
How to get a certificate of insurance
As soon as you’re approved for a business insurance policy and pay your first premium, you’ll generally receive a certificate of insurance automatically. If you need another one, you may be able to request it through your insurance company’s website or your insurance agent. The COI itself is typically free, but you’ll still have to pay for the insurance policies linked to it.
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The takeaway
A certificate of insurance is a quick and handy way to prove that you’ve got business insurance coverage. When you need to show a client or business partner that you’re insured in order to do business, a COI is the more convenient way to do it—instead of unsheathing your comprehensive policy details. It can also list other parties connected to the policy, such as a lender or a landlord.
Frequently asked questions
How long does it take to get a certificate of insurance?
A digital copy of your certificate of insurance may be available instantly upon purchasing a policy or within five minutes if requested separately. Of course, be prepared for longer wait times if you request a physical copy by mail.
What happens if your certificate of insurance expires?
If your certificate of insurance expires, you should simply need to renew your insurance policy and request a new COI to confirm that you have active insurance coverage.
What isn’t on a certificate of insurance?
A certificate of insurance doesn’t include the full details of your insurance coverage. Examples of information that may be left off your COI include policy exclusions, endorsements that add coverage for certain losses, and other specific terms and conditions.
Is a certificate of insurance the same as an insurance policy?
No, a certificate of insurance isn’t the same as an insurance policy. COIs summarize relevant details about insurance policies and provide proof that the policies exist, while insurance policies themselves lay out the full details of the contract between the insurance carrier and the policyholder.
Does a certificate of insurance cost money?
A certificate of insurance is usually free, as it simply condenses the information of coverage you actually purchased.