Understanding Insurance: What is a certificate of liability insurance?

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Understanding Insurance: What is a certificate of liability insurance?

Feb 25, 2022 · 5 minutes to read

As a professional service provider, you understand the importance of building trust between yourself and your clients. Business insurance is one way to do this. It communicates to others that you value your business and the people you serve.

In some situations, you may be asked to prove that you have Professional Liability or other forms of insurance. But how do business owners provide proof of Professional Liability insurance? A certificate of liability insurance (sometimes referred to as a professional liability certificate) is the most common and professional way to do this.

What is a certificate of liability insurance?

In simple terms, a certificate of liability insurance is proof that you have liability insurance coverage. This document explains the type of liability insurance you have, how much you are covered for, and the insurer who is providing the policy. ‘Certificate of liability insurance’ is commonly abbreviated as ‘COI’.

Who might ask for a COI and why do they need it?

Now that you understand what a certificate of liability insurance is, you might be wondering when and why you would need one.

A COI is for other businesses or individuals that you are working with. Hiring an uninsured company or sole proprietor is risky, and many businesses will not work with someone who is not insured. A certificate of liability insurance provides important assurances to businesses you are working with. If something goes wrong with you work, your insurer is there to compensate them through your policy for potential losses they may suffer.

Individuals that may request a COI include:

  • Commercial landlords – When you lease office or other workspace, you will typically be asked to provide proof of General Liability coverage.
  • Clients – Depending on the services you provide, your clients may ask for proof of Professional Liability insurance or other types of coverage before they will hire you.
  • Companies you subcontract for – If you work as a subcontractor or freelancer for another business, they may ask for proof that you are insured. This is usually more cost-effective for them than adding you to their own policies.
  • Your bank – You may need to provide a COI if you are financing property through them for your business.
  • Licensing bodies – You might be asked to provide proof of insurance to obtain a professional license from your state or city.

What information is in a COI?

Your certificate of liability insurance will contain important information about your insurance coverage and your insurer. This is typically provided on a standardized insurance form known as an Acord 25. COIs include details such as:

  • Your business’ (the insured’s) name and address – This information must match the details provided when you registered your business with the state.
  • Insurance company’s information – This makes it clear who will pay certain claims if they occur, as well as their financial rating. Some businesses will only accept COIs from highly rated insurance companies.
  • Coverage types and details – This is a list of the types of coverage you have, coverage limits, policy numbers, and expiration dates.
  • Certificate holder’s details – This is the name and address of the business requesting your COI. Including this information helps prove that your policies are in effect and the COI is legitimate.

In some circumstances, a COI may also contain other specific information. This usually relates to additional insureds, who can make a claim on your policy, who’s will be the primary policy if liability is shared, and other special endorsements.

How do I get a COI from my insurer?

Many insurers will provide you with a certificate of liability insurance automatically when you buy a policy. However, you will likely need many copies over the course of doing business. Each individual or business that requests a COI will need their own copy that includes their contact details.

Thanks to the internet, certificates of liability insurance can usually be requested online. Many insurers can generate a digital copy in minutes, though some may take longer to issue one. When you’re comparing insurance companies, you may want to ask how long it takes to receive a COI after a request is made.

Compare policies with BizInsure

A certificate of liability insurance is an important document that could help you secure new clients, expand your business, or prove yourself as a professional. It is issued by your insurer and contains information regarding your policies and the business requesting your proof of coverage. The first step to getting a COI is finding policies that fit your small business’ needs.

This is where BizInsure can help. We combine knowledgeable, licensed customer support with technology to help small business owners find affordable insurance coverage. Compare policies and receive your professional liability certificate instantly when you purchase.

Get Professional Liability quotes now.

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.

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