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What Is a Certificate of Insurance & Why Do I Need It?


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What is a certificate of insurance and why do I need it?

In short, a certificate of insurance, or a COI, is to business insurance what an auto ID card is to auto insurance. It is a proof of insurance for your business. When you purchased an auto insurance policy you also received a companion document, the insurance card. You keep this in your car to produce as proof of insurance in the event of an accident or a traffic stop. Likewise, when you purchase an insurance policy you should also procure a certificate of insurance that you can use to prove the insured status of your business when entering into new contracts.

The most commonly used type of COI is the Accord 25 form and it contains all the most pertinent details of your insurance policies on a standardized, single-page form. It is important to note that this is just a proof of insurance. A COI is simply intended to streamline access to the most important information in your policy, including the type of coverage, who it covers, the effective date of the policy, and the policy limits.

Who needs COIs?

Certificates of insurance are essential documents within any industry that utilizes contracted labor. Whether you work in construction, hospitality, logistics or healthcare; once contracts are signed and work begins good insurance standing is all there is to protect you from third-party liability.

If you are a business owner you should have a certificate of insurance, it really is that simple. Things become more complex as more entities enter the picture. As a project owner, not only are you responsible for the insurance policy of your business, but you’re also vulnerable to the details of every one of your vendors’ policies and each individual worker comes with their own risk of personal injury or property damage.

More vendors mean more liability and certificates of insurance help protect against third-party risk.

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