What is a Certificate of Insurance (COI) and why do I need one?
A Certificate of Insurance (COI) is a physical or electronic document that provides proof to your clients or business partners that you have a valid, active insurance policy.
An ACORD certificate is a certificate of liability insurance.
Most insurance professionals use a template developed by the Association for Cooperative Operations Research and Development (ACORD) to issue a liability Certificate of Insurance (COI). This is why you’ll often hear a COI referred to as an ACORD certificate or ACORD 25 form.
Having a COI is important for both client and vendor relations. Potential clients may ask you for your proof of insurance before conducting business with you and, if you can’t produce a certificate of insurance, it may lead to loss of business and rapport. Clients and vendors would like to enter a business relationship in which both parties have proper coverage in order to instill confidence in the partnership and mitigate risks. You must have proper insurance in order to also have a certificate of insurance issued.
A COI is issued by your insurer or its representative, and is often included in the package of documents you receive upon purchasing your policy. This one-page document summarizes the key details of your business insurance policy, including:
COIs are expected in many business situations where there’s a potential for liability or loss.
A certificate of insurance is important because, quite simply, it gives small business owners and contractors the confidence that they’re protected by insurance, and in turn, their clients have protection as well.
It’s the document that provides others with proof that you have business liability insurance for claims of bodily injury, property damage, or negligence, depending on your policy.
“A COI provides proof that, among other coverages, you have liability insurance and are protected against claims of bodily injury, property damage, and personal and advertising injury”
– Terri Hitchcock, Chief Insurance Officer
Many companies and individuals may also require you to provide a COI before signing a contract, for the same reason: if something goes wrong, they want to rest assured that they won’t foot the bill or have to make a claim under their own insurance policies for a loss you have caused.
For example, if you’re a handyman coming to work on a project at your client’s workplace, they’ll want to know they won’t be financially responsible if someone is injured due to an accident that results from the work you are doing for them. Likewise, if some of your equipment crashes through a window and causes property damage, they’ll want to know that you have the coverage to pay for that which can be corroborated by your COI.
The benefits of COIs extend to other types of businesses as well, including small business owners, freelancers, and solopreneurs. For example, if you’re an IT consultant who provides web development or monitoring services, your clients want to know that they’re protected from potential losses due to site downtime or a server crash. Your COI can put their minds at ease.
Basically, if there’s potential for something to go wrong during the course of your work with a client-whether that “something” is physical injury, property damage, or another type of loss-you’ll want to get an insurance policy (and the COI to prove it).
Almost all businesses hiring contractors will require that the contractor provide them with a COI. While less expected with other transactions, such as between service businesses, pre-empting the ask and providing your prospective client with a COI during the sales process can do much to net their trust and earn their business. It’s a clear indicator that you take your business seriously and establishes your professionalism.
In fact, it’s a common practice for clients to ask to be added as an Additional Insured to your policy, to ensure they’re covered if they are sued as a result of damage or injury you may cause. A COI can also display their status as an Additional Insured on your policy.
There is no cost to a COI as it’s not a contract of insurance coverage, merely proof of insurance.
However, costs can come into play with Additional Insureds. These costs to add an Additional Insured to a policy vary by the type of Additional Insured and from company to company.
It’s pretty simple: purchase an insurance policy. Once you’ve purchased a policy, you can request and then receive your COI, usually a PDF that is mailed or emailed to you.
Usually, you’d have to wait a few days for a broker to send it to you, but with Thimble, you get your COI instantly. When you purchase a Thimble policy, your proof of insurance appears immediately in your inbox with your policy.
Yes! Often, you have to contact your broker or insurance agent and request they share your COI. This can take time, and if you need to show proof of insurance to win a gig, you need to share your COI at a moment’s notice.
With Thimble, it’s easy to share your COI with clients-quickly using the Thimble app, or email or text it using your phone’s built-in sharing functions (the same way you’d share a photo on the go). There is no limit to the number of copies you can share – all at no additional charge.
Considerations before sending a client your COI: