Before anyone works on your home or property, you should ask for and get a COI. But what are certificates of insurance? Read on to know more!
A certificate of insurance, also known as a COI. It is a vital document that serves as proof of an active insurance policy. It is used to verify that a person or business has the necessary coverage to meet legal or contractual requirements.
We will cover everything you need to know about COIs, including what they are, why they’re essential, and how to obtain one.
What is a Certificate of Insurance (COI)?
A Certificate of Insurance is a document that has all the essential information about an insurance policy laid out in a standard way.
A certificate of insurance protects small business owners and their business partners. Before they start working together, offer both parties peace of mind, financial protection, and a way to share the risk.
A COI is a summary of what your business insurance covers. It has the most essential, basic information about your coverage, like when your policy starts and ends, whom it covers, what kind of coverage it is (general liability insurance, property insurance, etc.), and the policy’s limits.
The certificate of insurance was made to make it easier to show potential clients and business partners that you have insurance. You don’t have to send them your entire insurance policy contract. Instead, you can send them a one-page document with the most important details about your policy.
What is the importance of COIs?
- Proof of Insurance Status: A summary of the insurance policy with the policyholder’s name and the date the policy goes into effect. So, it shows whether or not insurance is an effect or not.
- Quick Access to Information: This is a condensed version of the insurance policy. So, it makes it easy to get the information you need quickly.
- Transfer of Liability: By calling the certificates from third-party contractors, the company that hired them can reduce their risk liability. The hiring company can move the loss to the third party’s insurance company if something goes wrong.
The Motor Vehicles Act says that you must have a Certificate of Insurance to prove that you have a valid insurance policy.
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Who needs a Certificate of Insurance?
Simply put, you should ask for a certificate of insurance from any independent contractor or business you hire to work on your property. If you are a contractor or run a business, you should have a Certificate of Insurance (COI) to show your clients that you are insured.
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How to obtain a COI
If you need to ask your insurance company for proof of insurance, here are the steps you’ll usually need to take:
First, ask your client who wants the COI what the coverage minimums and maximums should be. You should also get your client’s name, address, and tax ID number if you need to raise your premium.
Call your broker and tell them you need proof of insurance and the minimum amount of coverage. If your policy meets the requirements, the broker will contact your insurance company to get the COI.
If you need to buy a rider to get more coverage for the project, your broker will tell you what you need to know and give you the forms to fill out and send in.
Once you’re ready, your broker will make the COI and send you a printed certificate of insurance. Then, you’ll have to send it to your client to finish the deal and sign your contract so you can start working together.
Even though the process is easy to understand, you should know that getting the certificate of insurance from your broker could take a few days or even weeks. This depends on how easy it is to get in touch with your broker and how quickly they can finish all the necessary paperwork and give you your COI.
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What is the cost of a Certificate of Insurance?
A certificate of insurance should be acceptable, and neither the broker nor the insurance company should ever charge for it. It shouldn’t cost anything because the service is free from the insurer. But suppose the requested coverage limit means buying a “rider” for extra coverage. In that case, the insurance company might have to ask for an additional premium.
Common uses of COIs
A certificate of insurance is typically used to provide proof of insurance coverage to a third party, such as a client or customer. Common uses include:
- Requirement for a contract or agreement.
- Evidence of coverage for a specific event or project.
- Proof of coverage for a loan or financing.
- Proof of compliance with regulations.
- As proof of insurance for rental equipment or vehicles.
It’s worth noting that a certificate of insurance is not a policy but rather a document that summarizes the coverage under a policy.
Most COIs are suitable for five years. It would be best if you kept any COI you get forever. This is because you never know when there might be a problem with a job done on your property or for someone else. Having proof of the COI will help if there are any problems down the road.
Before anyone works on your home or property, you should ask for and get a COI. If you have a written contract, it should include insurance requirements like coverage and limits that can be checked with a Certificate of Insurance (COI).