Understanding a certificate of insurance document.
When two or more businesses work together, both want to know that working with each other won’t increase their legal liability. If your business hires vendors or subcontractors, you want assurance that hiring them won’t harm you financially. How to both parties put these concerns to rest? By requesting a certificate of liability insurance form.
A certificate of insurance (COI) form, otherwise called an ACORD certificate of liability insurance, is a unique document that establishes proof of insurance. It shows your liability insurance policies, coverage limits, and your policy effective dates. This shows everyone involved that you have adequate insurance. By obtaining a COI, your customers can close deals knowing that there is an insurance safety net in place.
There is no standard format for a certificate of insurance form. Generally, it will list everything from the date to the insurance coverages to the limits of liability. When you are reading a form, here is what to look out for:
- Ensure the business name on the form matches the vendor you thought you were hiring.
- Verify that the policy expiration date does not come before the completion date of your project. If it does, you can ask the vendor to submit another COI confirming the policy’s renewal.
- The company should have general liability insurance at the very least, as well as workers’ compensation insurance.
- Determine that the vendor’s liability limits meet or exceed the limits on your own insurance. If they don’t, consider requiring the person to purchase additional insurance.