Can you imagine what our lives would be like if we had to carefully read every single word in the agreements and contracts we sign on a daily basis? It’d be hours of reading just to install a basic application, get a bank card, or try a new service.
On paper we should be informed about every document we sign – but it really helps when we are able to skim, skip to the parts most relevant to us, or get a briefer summary. Thankfully, this is one of the problems solved by a certificate of insurance.
What is a certificate of insurance?
A certificate of insurance (shortened to COI) is a brief document containing key details about an insurance policy (usually just 1-2 pages). Instead of endless clauses and long descriptions of situations you’ll probably never face, a COI will have just a summary with basic and easily understandable information about your coverage.
If you want to cooperate with another company but first need to check their insurance status, this is likely what you will expect them to provide. Accordingly, you may be asked to provide this document as well as proof of your coverage.
What’s in a certificate of insurance?
There is no universal format or standard for COIs, which means different insurance providers and brokers will issue different documents – usually tailored to your immediate needs. Nevertheless, some elements are especially common, including:
1. information about the insured entity (companies, brands, employees, property, etc.)
2. contact information for both the insurer and the insured
3. dates and timeframes that define the validity of the insurance policy
4. insurance type and/or coverage limits
5. an identifying number/code for this specific policy.
The content and format of the certificate also often vary based on the type of insurance at hand. There are three common categories for which certificates are issued:
– Liability insurance. Protects against various unintentional accidents and adverse effects that happen at your place of business or are connected to your business dealings.
– Workers’ Compensation Insurance. Generally covers costs associated with workers falling ill or getting injured at work (as well as fatal cases).
– Vehicle/Property insurance. Covers damages and other issues affecting vehicles, tools, and other company property (including buildings and the items inside).
COI verification
Because certificates are a major factor in the consideration and decision-making process for cooperating companies and individuals, it is crucial to verify their suitability and validity before finalizing any sort of agreement.
At the most basic level, you should pay attention to the coverage timeframes, restrictions, exceptions, and the way some theoretical situations are described. It also helps to check that the identifying number of the policy matches an identical and active document from the insurance provider’s side. Because you never know – forgery is always a possibility.
COI tracking
Last but not least, it’s worth mentioning that COIs should be tracked (by expiration date, instances covered, or by names and entities). This is so you don’t start working with someone only to later realize that their coverage is not helpful when something unfortunate occurs.
