Certificates of Insurance make the business world go round and round. General contractors demand them from subcontractors. Commercial lenders request them from borrowers. Landlords require them from tenants. Virtually every business will request or will be asked to provide a Certificate of Insurance at one time or another, which raises an important question. What’s a Certificate of Insurance?
Certificates of Insurance (COIs) are used to verify insurance coverage. They are issued by insurance companies and agents to provide proof of insurance to the person or entity needing verification—the certificate holder. COIs provide specific information about existing insurance coverage, such as:
- the name of the issuing insurance companies;
- policy numbers and effective dates;
- types of insurance (general liability, automobile, workers’ compensation, property, cyber liability, etc.); and
- policy limits.
It’s important to know what COIs are, but so is knowing what they are not. Certificates of Insurance:
- Are NOT insurance policies.
- Do NOT provide certificate holders with any rights under the insured’s policy.
- Do NOT extend or modify the coverage provided by the insured’s policies.
- Do NOT create a contract between the insurance company and the certificate holder.
COIs are provided for informational purposes only. They offer a superficial snapshot of insurance coverage that is in place at the time it is created. Nothing more. In fact, a COI issued today may be out of date tomorrow. The only way to truly evaluate insurance coverage is by reading the policy itself. Nevertheless, as long as you understand their limitations, Certificates of Insurance provide a quick, easy and efficient way to request or provide proof of insurance coverage.
Please contact us to learn how Setnor Byer Insurance & Risk can help manage your Certificates of Insurance.