If your customer wants a certificate of insurance from you, you should know that it’s not a scary or unwarranted ask, just a simple business practice that is helping to ensure both of your protection.
Follow along as we dive into some common questions surrounding certificate of insurance services, such as why a customer would need one, how they’re actually generated, and some COI best practices you can keep in mind along the way.
What Is a Certificate of Insurance for Customers?
A certificate of insurance is essentially a special piece of paper that confirms someone’s insurance coverage. It’s like a car insurance card: a quick glance at an insurance policy in one concise place that you can use to provide proof that you have the coverage (and in the amount) you say you do.
A certificate of insurance for customers refers to when a buyer of something (goods, services, property, etc.) needs to verify the coverage in place for a corresponding seller. Although business relationships require some level of trust, it’s ideal to confirm without a doubt that everyone has adequate coverage in order to mitigate risks in case something goes wrong while working together. Learn more about What is a certificate of liability insurance?
Why Would a Customer Need a Certificate of Insurance?
There are many cases when a customer, typically a purchaser of business services, will need to be involved in requesting and/or verifying a certificate of insurance to make sure that whoever they’re working with has the right kind and amount of coverage.
Some examples of when a customer might need a COI insurance include: when purchasing supplies or other major deliveries and when hiring a contractor, subcontractor, or construction crew for a building project.
Why Do People Ask for a Certificate of Insurance?
There are more than a few important reasons why it’s a best practice for people to ask for certificates of insurance, especially when entering new business relationships. Here are five reasons someone would and should request a COI certification:
- They want to ensure that everyone in a partnership, event, or transaction is financially protected with insurance.
- They want to remain compliant with industry-wide and regulatory requirements.
- They want to minimize and mitigate their risk, not be working with someone who is unable to pay out for damages in the case that they come up.
- They want to protect their business assets and not be left on the hook for unexpected costs.
- They want to do business “the right way.” With COIs, there are no under-the-table deals, no cases of faulty or expired insurance, and no uninsured lawsuits coming your way.
Who Asks For a Certificate of Insurance?
Both businesses and individuals ask for certificates of insurance. They do so in order to verify that someone has an adequate amount of insurance coverage in place to protect their business and assets. Here are a few situations where it would be pertinent for someone to request a COI:
- When they’re hiring a contractor for a job.
- When they’re hosting a conference with multiple exhibitors.
- When they’re renting out spaces to tenants operating businesses.
- When they’re getting materials delivered.
- When they’re signing off on dangerous work.
- Anytime they’re working with third parties, that could sign them up for financial risk.
Should I Ask for a Certificate of Insurance?
You should absolutely be asking for a certificate of insurance for contractors in any scenario where you have hired workers to do a job for you, are involved in business with parties operating their own business, are a landlord for businesses, or are otherwise hiring third parties.
Suppose something serious or damaging happens throughout a business relationship. In that case, you can keep your company off the hook for financial damages by ensuring that the vendors and contractors you’re working with have proper coverage and the ability (through insurance) to pay for any damages should they arise.
Can I Issue My Own Certificate of Insurance?
You cannot issue your own certificate of insurance. It’s a pretty important piece of paper, so we don’t entrust everyone with the right to generate their own, just the insurance agency providing the actual protections under the policy.
To get a COI, simply send your client, hiring party, or other business partners a certificate of insurance request email, laying out the details of what you’re requiring from their insurance coverage. They’ll work with their insurer to issue the document and deliver it back to you as soon as possible so you can verify that it meets your needs, keeping your customers and business happy and financially protected.
How We Can Help You Manage Your COIs
Avoid costly claims and having to hunt down renewal insurance certificates with illumend, from myCOI. We make it easy to automate and accelerate your COI tracking by combining AI speed with real insurance expertise. Request a demo to see for yourself!
