Insureon Blog

How to read a certificate of insurance form

25. June 2019 20:12

Certificate of insurance form

By Harry J. Lew, Insureon Contributor

When people hire your company, they want to know working with you won’t increase their legal liability. Similarly, when you hire vendors or subcontractors for your firm, you want assurance that hiring them won’t harm you financially. How do both parties put these concerns to rest? By requesting a certificate of liability insurance form.

A certificate of insurance (COI) form, also known as an ACORD certificate of liability insurance, is a document that establishes proof of insurance. It lists on one page your liability insurance policies, your coverage limits, and your policy effective dates. This shows everyone involved that you are adequately insured. By reviewing a COI, your customers can close deals knowing there’s an insurance safety net in place. (See a certificate of insurance example [PDF]).

Why is a certificate of insurance form important?

Most business owners strive to be competent, honest, and truthful. Sadly, reality may fall short of expectations. Vendors and business partnerships might:

Asking for a current COI helps verify a potential vendor or subcontractor’s financial-responsibility claims. When lining up work with a new client or vendor, never hesitate to provide or ask for a certificate of insurance form. It’s simply a good business practice.

In what cases are certificates of insurance necessary?

Certificates of insurance have a wide application in the business world. Any time parties to a transaction are concerned about losses and legal liability – something most small businesses worry a lot about – certificates of insurance play an important role. Here are some cases in which COIs are essential:

As you can see, whenever businesses engage in projects that can trigger losses for multiple parties, certificates of insurance are the go-to document.

What are the main sections of an ACORD certificate of insurance form?

There is no standard format for a certificate of insurance form. However, ACORD (Association for Cooperative Operations Research and Development), a nonprofit property and casualty insurance organization, provides a form used by most insurers, agents, and brokers. The ACORD COI packs a large amount of information on one page, including:

How to read a certificate of insurance

Once you receive the form, here’s what to look for:

In rare cases, business owners will present counterfeit COIs because they can’t afford to maintain genuine insurance. If you have any reason to doubt someone, request the COI directly from the person’s insurance agent or broker.

Is a certificate of insurance form the same as an insurance policy?

No, a certificate of insurance is only a summary of existing insurance coverage. But it isn’t an actual insurance policy. In other words, when you give a customer your COI, you’re not entering into a contract to cover that person’s losses. You’re just providing proof that you have insurance. However, you may wish to provide coverage to the certificate holder. In that case, you must make your customer an “additional insured” on your policy. This is easy to do. Just call or email your agent or broker and ask the person to amend your declarations page to include the name of your customer.

Access your certificate of insurance with Insureon

Insureon provides an easy online application to compare insurance quotes for top-rated carriers in the United States. Once you have purchased a policy, you can download your certificate of insurance or request one from your carrier online with Insureon’s Customer Portal. Start an application today to compare quotes to insure your business.


Risk Management

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