A Certificate of Insurance is a single page document that lists active, in-force insurance policies for a business's insurance program. Certificates of Insurance (COI) are often requested when one business engages the services of another, and wants verification that the business has their own insurance program. It is the default document to convey to an interested party what kind and amounts of insurance another business has.
Gordon Atlantic Insurance's standard for turning certificates around is 4 business hours. That means if someone asks you for a Certificate of Insurance, will will do everything we can to get that out in less than four hours!
A standard certificate will list the General Liability, the Automobile Liability, Excess Liability, and Workers Compensation policies. It will also provide the name of the insurance company and policy effective and expiration dates. The latter is most important particularly if the expiration of an insurance policy straddles the time that a job is being done. Thus, it lets the certificate "holder," or the company engaging another company, know when the subcontractors insurance runs out. It is a great management tool for verifying insurance of others in business.
Certificates also convey other important information that may be present between working parties. One of the most common is the Additional Insured. The Additional Insured status is another step toward requiring subcontractors to assume full responsibility for their actions on a job site, and the Certificate of Insurance can confirm this status. Another common Additional Insured scenario is with landlords and tenants, or regular service providers such as landscapers.
Another policy feature that may be required when different businesses collaborate on a project is the Waiver of Subrogation agreement. The certificate likewise provides a checkbox to acknowledge whether Waiver of Subrogation exists between parties.
Certificates are requested in many other business relationships. A landlord should require all tenants to have liability insurance so that a lawsuit from a tenant's actions does not come back to the landlord. The COI may be used to document compliance with this arrangement.
Another important insurance consideration disclosed on a certificate relates to Workers Compensation insurance. In Massachusetts, business owners may opt out from having Workers Compensation coverage in order to eliminate the cost of including Workers Compensation for themselves. A Certificate of Insurance can disclose whether the owner has opted out or not.
Businesses that collect many Certificates of Insurance often organize these certificates by expiration date of their subcontractors insurance. Thus they will know when the insurance of the subcontractor ends as a reminder to confirm a renewal.
One important caveat: a certificate only shows insurance in place on a given day. There is no specific obligation by the insurer or by the agent or broker to notify a certificate holder if the subcontractor lets their insurance cancel. Generally speaking, when old claims make their way back to a general contractor, the subcontractors insurance often has expired.
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