WHAT IS A CERTIFICATE OF LIABILITY INSURANCE?
Do you perform work on a contract basis?
Do you need to provide proof of insurance to maintain your contract?
Do it the convenient and faster way…provide a “Certificate of Insurance"
In many situations, one party to a contract will agree to have specified insurance coverage amounts or have the need to name a party as an additional insured. Some may even need to provide a waiver of subrogation. Insurance policies are lengthy in nature and an easier way to produce and define the information specifications of a policy is to issue a certificate of insurance. Certificates serve as proof of some financial protection in the event of a loss and are usually required by written contract between two parties who wish to do business together.
A certificate of insurance is a short, one page document, and serves as proof that a company holds general liability insurance. Additionally, other forms of insurance may be shown on a certificate like Commercial Auto liability insurance, Workers Compensation insurance, professional liability (E&O insurance), and much more. It is quick and easy and sometimes can be obtained by the insured’s broker. A certificate of insurance serves as a practical way to outline the names of the specified parties and the amounts of insurance that an entity holds. Some businesses work for others on a contractual basis and must carry liability insurance. Most times a certificate is created by the entity’s insurance company and provided to other parties upon request.
What information is included in a certificate of insurance?
- Name of the insured
- Insurance company information including policy numbers
- Name of agent or broker responsible for policy issuance
- Type of coverage issued
- Effective date of coverage and policy expiration date
- Amount of coverage with applicable limits
*Although issuing certificates is a quick and easy way to provide coverage details, there are certain risks in doing so that parties should be aware of. There are minimal details listed on the certs which carry certain risks involving inconsistencies between the data reported on the certificate and the actual up to date information contained in the insurance policy. Great care should be taken in the preparation and review of the certificates by all parties to assure the information is correct and up to date with the current policy specifications.
How do you get a certificate of liability insurance?
You can receive a certificate of insurance after you purchase a liability insurance policy. Most times it can be used when a business contract requires you to show proof of your liability coverage.
