Certificate of insurance for contractors
A certificate of insurance (COI) is a document that proves you have insurance coverage. Contractors may need one to work with certain clients, get a license, sign a lease, or take out a loan.
What is a contractor’s certificate of insurance?
A certificate of insurance is the official proof of coverage that you receive from your insurance provider. It’s also known as an ACORD 25 form.
Independent contractors and other self-employed business owners use these forms to show clients, landlords, lenders, and licensing boards that they are insured.
A COI includes important information about the certificate holder’s policy, such as:
- Insurance provider
- Coverage type
- Business name
- Policy number
- Per-occurrence and aggregate coverage limits
- Exclusions
- Policy expiration date and effective date
The most common type of insurance for contractors is commercial general liability insurance. This policy protects contractors against legal costs when someone blames them for a bodily injury, property damage, defamation, or copyright infringement.
Why do contractors need a certificate of insurance?
Contractors, such as carpenters, lawn care professionals, and window cleaners, may need a COI in order to get licensed in a trade, sign a contract, bid on a project, secure a commercial lease, or qualify for a business loan.
Some clients might ask contractors and subcontractors to carry professional liability insurance, also known as errors and omissions insurance (E&O). A professional liability policy covers lawsuits related to unsatisfactory work, missed deadlines, and mistakes.
Most states require businesses with one or more employees to have workers’ compensation insurance. Some states require workers’ compensation coverage for sole proprietors in riskier construction professions, such as roofing.
Whether you're looking to acquire a new contract for a construction project or just need to meet a legal requirement, having proof of insurance is crucial. A COI not only shows that you have the coverage required by your clients and state laws, but it can attract new clients who may choose to work with you instead of an uninsured competitor.
How do I get a certificate of insurance for contractors?
Hey there! Yeah, up here in the corner. Good news: You've purchased your policy to protect your business! But that's only the beginning...
A licensed expert will email you a Certificate of Insurance the day you buy a policy. I'd do it, but, you know, I'm an animated talking head.
The certificate means peace of mind. And you can access it on the Insureon online customer portal where you can review policy info and all of your insurance documentation.
Need additional assistance? Or want to make changes? Yeah, no problem! Call toll free, or reach out to a dedicated account manager with questions about billing and claims.
We're with you now, and as you grow. Behind the scenes, but there when you need us. Insureon. Protection is peace of mind.
Most Insureon customers can get their certificate of insurance within a couple of hours after applying for quotes. Businesses that are more difficult to insure can usually get their COI within 48 hours.
You can speak with a licensed insurance agent to get advice about the types of insurance you need, which policy limits to choose, or any other questions.
Do all contractors need a COI?
More often than not, tradesmen like general contractors, electricians, plumbers, and HVAC technicians need a certificate of insurance in order to get licensed in their state. That may include showing proof of general liability, workers' comp, or a surety bond.
From getting licensed to bidding on projects and signing contracts, there are many circumstances where you might need a COI. It's a good idea to secure proof of coverage in advance, so you can get started working on projects without delay, and protect your business against unexpected lawsuits.
However, not every contractor needs a COI. In some cases, you may want to buy insurance for your own reasons, such as protecting your business against expensive legal costs from accidental injuries and property damage.
What does a certificate of insurance prove?
Simply put, a certificate of insurance proves your business is insured. It shows your small business can handle a lawsuit, which makes clients more willing to work with you.
Governmental authorities, such as your state or local government, will expect you to have the right types of insurance to mitigate the risks of your business and to make sure you’re following the law.
The same is true for a commercial lease. If an accident at your business injures a customer, your landlord wants to know they won’t be held responsible for legal costs or medical bills. When you have insurance, it shows your business can handle these costs.
That’s why proof of insurance is so important. It provides peace of mind to the people you work for or rent from, as well as your own business.
View a sample ACORD certificate of liability insurance form [PDF].
How much does contractor business insurance cost?
Here are the average costs of contractor insurance for Insureon's customers:
General liability insurance: $83 per month
Professional liability: $58 per month
Workers' comp: $160 per month
Many contractors qualify for a business owner's policy (BOP), which costs an average of $115 per month and includes general liability and property insurance at a lower cost than buying them separately.
What factors determine contractor insurance costs?
While some insurance companies charge for each copy of a certificate of insurance, with Insureon your COI is free and available online whenever you need it.
The cost of contractor insurance coverage itself depends on many factors, such as:
- Industry risks. The type of work you do impacts your premiums, as landscapers, cleaners, handymen, and other contractors all face different risks.
- Business property and equipment. A contractor who only needs basic tools and protective gear will pay less for property insurance than one who owns a building or construction equipment.
- Number of workers. Every worker increases the risk of a workplace accident or mistake, which raises the cost of workers' comp, general liability, and similar policies.
- Annual revenue. Overall, contractors with increased earnings take on larger projects, face higher risks, and file more frequent claims, which results in higher premiums.
- Coverage limits and deductibles. Policies with higher limits cost more but cover more expensive claims. Choosing a higher deductible can lower your premium, but your insurance won't activate until you pay the full amount.
- Claims history. A contractor who has filed an insurance claim in the past can expect higher rates than one with a clean history of claims.
- Business location. Crime rates, population density, healthcare costs, property values, and other regional factors affect how much contractors pay for insurance.
- Workplace safety. Insurance companies may offer lower rates to contractors who implement safety and security measures to avoid claims, such as employee training and surveillance cameras.
How to save money on contractor insurance
It’s easy to find affordable contractor insurance with Insureon's free online quote process. We partner with top-rated U.S. providers to find the right contractor liability insurance for your budget and your business needs.
Here are a few other ways to save money on your premiums:
- Get a minimum premium policy. When buying workers' comp for yourself, you might qualify for a ghost policy or a pay-as-you-go policy, which can provide proof of coverage at a lower cost.
- Customize your coverage. Choose lower limits or higher deductibles to save money, but make sure your policy can still cover a potential claim and that you can afford to pay the deductible in a crisis.
- Avoid accidents and claims. Contractors can prevent employee injuries and customer accidents that lead to claims by implementing a strong risk management strategy, such as strict enforcement of safety protocols.
Insureon's licensed agents can help you compare policies and find cost-saving insurance bundles specific to your profession.
Do subcontractors need a certificate of insurance?
While contractors are typically responsible for complying with client requirements and state laws, subcontractors often need insurance too. General contractors and project owners may ask to see a certificate of insurance before a subcontractor is allowed on a jobsite.
Other times, the general contractor or project owner will include a subcontractor in their policy as an additional insured, which extends insurance protection to them. This coverage could be limited to the duration of a construction project, or for the length of the policy if both the contractor and subcontractor work together on a regular basis.
For example, if a commercial builder has a team of subcontractors that it usually relies on, the company might add these contractors as additional insureds for the policy period, which is typically one year.
It’s worth noting that an additional insured cannot be included in professional liability coverage.
How do I add an additional insured to one of my policies?
To add a subcontractor to one of your insurance policies, simply notify your insurance provider. The insurance carrier will likely ask for details about your subcontractor, such as their name, address, and other key information.
This will likely increase your premium, but it’s typically less expensive than having subcontractors buy coverage on their own.
The insurance company will then add the additional insured endorsement to your certificate of insurance.
Get a contractor COI with Insureon
Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent to make sure you get the right coverage. Once you choose a policy, you can begin coverage in less than 24 hours and get your certificate of insurance.
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The average costs on this page were derived from our data on small business owners in the contracting field who purchased policies through Insureon. Most of our customers have less than five employees, annual revenue ranging from around $50,000 to more than $200,000, and five years or less in business.
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