Certificate of Insurance (COI)

What is the Certificate of Insurance?

Certificate of insurance is a document given by the insurance company or any agent. The COI consists of all the crucial details of an insurance policy. It is intended to prove a policy’s status and it reduces exposure and protects against third-party liability.

COI is not an insurance policy and does not provide coverage. It encompasses a picture of the policy on a single form which incorporates the most relevant aspects such as policyholder’s name, policy effective date, type of coverage and policy limits.

Importance of Certificate of Insurance

• It proves the insurance status and it is the summary of an insurance policy. It effectively serves as proof of insurance.
• It provides quick access to information and it constitutes an express version of insurance policy.
• It helps in reducing the liability by carefully documenting the certificates of insurance from all third-party vendors. COI helps to transfer the loss to the third party’s insurer if something goes wrong.

Understand Certificates of Insurance

In business, COI plays a prominent role where the liability and significant losses are in concern. Usually, it is used by small business owners and contractors where they are granted protection against the liability for workplace accidents or any injuries. The purchase of any liability will trigger the issuance of the insurance certificate.

On the other hand, if the business doesn’t have COI, then they may face difficulty in winning contracts. Generally, many companies and individuals hire contractors and the client wants to know about the liability insurance. If the business has liability insurance, the client will not assume any risk if the contractor is responsible for any damage or injury.