(And WHY . . . Should You Care?)
A Certificate of Insurance (COI) is simply a document, issued by an insurance agency or broker, that shows or proves you do, in fact, have 
insurance coverage in effect at the time the COI is issued.
A COI provides important information about an insurance policy, such as a policyholder’s name, coverage type, the dates it is effective and expires, the insurance carrier’s name, and coverage limits, if applicable.
A COI is NOT an insurance contract and does not change the terms of the insurance policy or policies it references.
Instead, a COI provides information on key aspects of the coverage under the insurance policy to parties other than the insured — e.g. a bank whose loan approval may be contingent upon receiving proof or evidence of your coverage or, a homeowner who wants to see proof of coverage before hiring a remodeling contractor to begin doing work on the client’s home.
Why Is a COI Important?
COIs are immensely important to businesses and independent contractors. They create confidence for all the parties involved in a business transaction. This is why contractors and business owners should have them on hand to show clients at all times. If you are wondering why COIs are important, imagine the following scenario:
A construction company hires a subcontractor to help them finish a major project. Unfortunately, during the project, the subcontractor accidentally causes $100,000 in damage to a building while working on the project. Fortunately, the subcontractor had provided a COI to the construction company prior to commencing his work. The construction company reviewed the COI and was confident that the subcontractor had insurance coverage that would help pay for any losses the subcontractor might cause while working on the project.
Having a COI on hand can be highly beneficial to a company. A COI shows customers that the company has insurance that can help pay for the cost of damages in a single, brief and easily understood document.
Prospective clients may also request to see a COI before they agree to do business with a company (e.g., a homeowner requests one BEFORE engaging a contractor to perform work at their home).
A Certificate of Insurance is most often requested or used to show evidence of coverage involving various types of commercial insurance coverages, including:
• Commercial General Liability Insurance
• Workers’ Compensation Insurance
• Commercial Auto Insurance
• Commercial Property Insurance
• Business Owners Policy (BOP)
NOTE: A COI only provides proof of insurance coverage on the date it is issued, so the party requesting a COI from you may also request that you notify them of any subsequent policy cancellation or modification.
Who Needs a Certificate of Insurance?
All businesses –– that maintain insurance coverage should have COIs. But COIs are especially important to independent contractors and small businesses doing work involving high risk of third-party damages or losses.
If a contractor wants to win competitive bids, they often need to provide a COI to prove their general liability insurance coverage is active and provides adequate protection against accidental property damage or bodily injury claims the contractor may cause while working on a customer’s project.
When Are You Likely To Be Asked for a COI?
A customer or client will typically ask for a COI before it hires you. By requesting a COI upfront, the customer can verify your business has adequate insurance coverage. If you do not have insurance coverage, you and/or your business could be 100% financially responsible for any loss suffered by your customer.
If there are gaps in the insurance coverage, the customer may request the contractor obtain proper coverage and prove it by providing a new and current COI. If the contractor refuses to obtain the requested insurance coverage — and a new COI — the customer will likely keep on looking for a different contractor to hire.
When a prospect or existing customer requests a COI, you’ll want to make sure it shows them the following:
• That your company has the desired / required coverage limits to do the work proposed;
• Each policy is listed in the COI;
• The COI lists the name of the company or person being hired;
• The insurance policies are issued by a legally licensed insurance carrier; and
• The policies listed in the COI are not expiring before the date the project is expected to be completed.
To ensure a contractor has adequate insurance coverage, a company will often employ a COI tracking service to monitor that their contractors are operating “in full compliance” with the insurance coverage requirements for contractors they may hire.
If the company is hiring multiple contractors for a larger project, such as a commercial construction project, it may need to review and track numerous COIs — all at the same time. Often, project managers do not have the time nor ability to track multiple COIs. Fortunately, there’s usually “an app for that” to help with this tracking.
Tracking COIs is a key element of a company’s risk management approach. For example, if a company does not keep track of policy expiration dates listed in the COIs, and a contractor’s insurance policy lapses, the contractor could be legally responsible for any losses they cause –– which could lead to significant awards for damages!
There are several benefits to tracking COIs. By tracking COIs, a company can potentially:
• Identify potential coverage gaps and gain better insights by centralizing data.
• Eliminate lapsed coverages by using automated notifications that tells the company when policy
expiration dates are approaching, and if coverage has actually lapsed.
• Protect their business as conditions, contractors, vendors, and project scopes change over time.
• Improve on-time completion rates and productivity by ensuring workers can remain working at a site.
How Do You Get a Certificate of Insurance? ![]()
Fortunately, obtaining a COI is pretty easy. However, note that a COI is only issued for an active insurance policy. If you do not currently have the insurance coverage for which a COI is being requested, you can obtain that insurance coverage through a duly-licensed insurance agency — like DSD Insurance.
After obtaining coverage for you, we will help you create an online account where you can access all of your important insurance documents.
Most of the time, you can access and print a COI directly from your account. If you’re unable to generate a COI through your DSD account online, you can always contact DSD Insurance to request one for you.
How Much Does a Certificate of Insurance Cost?
Good News! COIs are normally “FREE” to obtain. Since you’re requesting basic information about your insurance coverage, DSD Insurance does not charge you to issue a COI. At DSD Insurance, this is all part of what we do for you, our valued policyholder and why we say, “At DSD Insurance — we’re your partner for life!”