What is a Certificate of Liability Insurance (COI)?

Before you sign up for insurance, it’s important to understand this key term. So, what exactly is a COI?

  • A Certificate of Insurance (COI), also known as a Certificate of Liability Insurance, is proof of an active, valid insurance policy and serves as verification to your vendors, customers, or landlords that your business is indeed insured.
  • A COI for most insurance policies is no longer than one page. It lists the name of the insurance company, the types of coverage your business has, its limits, policy numbers, and effective and expiration dates.
  • Potential clients may request that you have insurance coverage in place for which a certificate of business insurance can be used to demonstrate compliance with this request.
  • Typically, contractors and clients require insurance that grants protection against liability for workplace accidents or injuries to conduct business. A certificate of insurance is important for business because the COI evidences that the insurance is in force.

What is an ACORD 25 form?

An ACORD 25 form 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, in insurance terms, referred to as an ACORD certificate or ACORD 25 form.

Do I need a Certificate of Liability Insurance?

Having a certificate of insurance is important for both client and vendor relations. Potential clients may ask you for your liability insurance certificate before conducting business with you and, if you can’t produce one, it may lead to loss of business and damaged 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. In order to obtain a certificate of liability insurance, you must have valid and current insurance placed in your company name.

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:

  • Your legal name and business information, including your state and street address
  • The insurer who issued your policy, their address, and phone number
  • The policy number, effective date, and expiration date (e.g., the time period your insurance is in place)
  • The type of coverage included (e.g. professional liability or commercial general liability)
  • Insurance limits and deductibles in dollar amounts
  • The party requesting the COI (called the “Certificate Holder”)
  • An indication of whether the Certificate Holder has been named an Additional Insured on the policy

Why do I need to show proof of liability insurance?

General liability insurance certificates are commonly utilized in business situations where there’s a potential for liability or loss.

A certificate of insurance for small businesses is important because, quite simply, it gives business owners and contractors the confidence that they’re protected by insurance, and in turn, their clients have protection as well.

A COI is the document that provides others with proof that you have business liability insurance to protect your business against claims of bodily injury, property damage, or negligence.

“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 certificate of liability insurance before signing a contract, for the same reason: if something goes wrong, they want to rest assured that they won’t suffer financial consequences 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 construction 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, that person will want to know that you have the coverage to pay for that, which can be corroborated by your COI. It’s a good call to always have your COI on file, ready to prove you are prepared for the next business opportunity.

What are the benefits of a 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 certificate of business insurance 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 which utilize contractors will require that the contractor provide them with a liability insurance certificate. 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 gain their trust and earn their business. It’s a clear indicator that you take your business seriously and helps to establish you as a professional.

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.

How much does a Certificate of Insurance cost?

There is no cost for a certificate of liability insurance as it’s not a contract of insurance, merely proof of insurance coverage.

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 insurance company to insurance company.

How to get a Certificate of Insurance

It’s pretty simple: purchase an insurance policy. Once you’ve purchased a policy, you can request and then receive your COI, typically a PDF that is mailed or emailed to you.

Usually, you’d have to wait a few days for a broker to send your COI to you, but with Thimble, you get your proof instantly. Simply click “Get a Quote” on the Thimble app or website. When you purchase a Thimble policy, your COI and policy appear immediately in your inbox and app. You can request as many copies of your COI as you need at no additional cost.

Can I share my COI?

Yes! Typically, you would have to contact your broker or insurance agent to request they create and share your certificate of insurance for each COI request . This can take a lot of time, and if you need to show proof of insurance to win a gig, that delay could mean the difference between success or “maybe next time.”

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 COI copies you can share – all at no additional charge.

Considerations before sending a client your certificate of liability insurance:

  • Ensure your business name is properly displayed on the COI – does the name of your company match what is listed on the document?
  • Ensure that the coverage shown on COI matches what is provided by your policy by checking your liability policy limits.
  • Expect clients to contact the insurer of the COI to make sure it is a real entity.
  • Look at the Expiration and Effective dates listed on the Certificate of Insurance – will those dates cover the length of your business partnership?
  • Potential clients will most likely double-check your COI when beginning a partnership even if you have done business with them in the past.