Certificate Of Business Insurance: Does Your Business Need It?

Photo by Amy Hirschi on Unsplash
1 year ago

A certificate of insurance is an important document – it proves that you’re covered against accident or lawsuit. This document reassures potential clients that your business is fully covered – and that you can prove it.

What is a certificate of business insurance?

Issued by your broker or insurance company, a certificate of insurance (COI), corroborates the existence of your insurance policy. It is also sometimes referred to as an ACORD certificate or ACORD 235 form.

The COI is simply a one page document that summarizes your coverages and outlines the key conditions of your policy. It typically includes a brief summary of the various types of insurance you carry as a business. It also verifies expiration dates, limits, policy numbers and effective dates. Some insurance companies enable instant access to your COI online, whilst others will require you to order your certificate and have it mailed to you.

A company without a certificate of business insurance will find it difficult to secure potential clients because the COI makes it clear that you’re covered against all liabilities, eliminating risk on behalf of the contractor or provider you’re going into business with.

Why do you need a certificate of business insurance?

Being able to produce a COI proves that your business is covered against all liabilities. It shows that you are a trustworthy business with all the correct paperwork and insurance in place. Without it, your associates may query your coverage and look elsewhere so it is worth having this document to hand.

How long does it take to get a COI?

Not all providers allow instant access to the COI via online access, some send this document in paper format. Request this certificate as soon as you’ve secured business liability insurance to make sure you can show it when asked. Some providers can take weeks to mail out your certificate which can cause quite the headache for a potential client who needs immediate proof of coverage to sign a new contract.

How do you add a client to your COI?

Potential business contracts don’t always just want to see your certificate, they might also ask to be added to it.

There are two reasons for this, firstly if there’s an accident it’s explicitly clear who is responsible for liability. Secondly, if you’re cancelled for any reasons your associate will be notified. In both instances, adding a client to your COI gives them a sense of reassurance and peace of mind.

It is easy enough for your insurance provider to send a copy of your updated certificate to your business associates.

Should you be requesting COIs from other companies?

Yes. In just the same way providing a copy of your certificate eliminates risk for a business associate or contractor, you require the same level of protection.

It’s worth contacting your client’s insurance company to request their COI. This minimises risk to you and protects you from fraud. Insurance companies will also advise that you contact your client’s insurance provider directly too – in fact, they may even stipulate this in their policy documents. If insurance providers are made aware that you don’t have the correct documents, they could raise your premiums.

How long does a certificate of insurance last?

Typically, your certificate will last five years. It is worth holding onto your certificates indefinitely though as you never know when there may be an issue with work carried out either on your premises or work that you completed on behalf of another client some time ago.

How much does a COI cost?

In most cases, your COI will be sent to you free of charge.

Essentially, any business owner needs a certificate of insurance. It is the first line of defence in establishing that you offer a trustworthy and responsible service. Other reputable businesses or contractors will avoid working with you if you can not prove your liability coverage. A certificate of business insurance protects you and your business partners in equal measure and is a critical component of good business. So, make sure you get your certificate of insurance after buying the actual insurance.

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