What is a certificate of insurance (COI)?

When you're working with another company, whether it's a supplier, contractor, or someone hosting events on your property, it's crucial to know whose business insurance will cover any incidents or losses. This helps prevent confusion if something goes wrong.

But how do you show proof of insurance when you're entering a new partnership or signing a contract with a client? That’s where a certificate of liability insurance (COI) comes in.

Certificates of insurance (COI) continue to be one of our most popular topics, with a variety of frequently asked questions. Today, businesses are quite familiar with them; however, our brokers are often asked to explain their exact purpose and when they are required.

Understanding a certificate of insurance and why it is important

A certificate of insurance is a document that proves you have insurance coverage. It lists the key details of your policy and confirms that it's active. This is important because it makes sure that all parties in a contract are properly protected from potential risks or liabilities. Keeping track of your COIs helps you stay compliant and ensures your coverage is always up to date.

Without a COI, it can be harder for business owners or contractors to secure contracts. Many companies and individuals want to make sure that the businesses or contractors they hire have liability insurance so they don’t have to take on the risk if the businesses or contractors cause damage or injury or deliver substandard work.

Basically, a COI shows that you're able to cover the costs of a liability claim if something unexpected happens—like if someone gets hurt or suffers a financial loss because of your work. For instance, if the insured party is sued due to an accident or injury, the COI can serve as proof of coverage, helping to support their defence in the lawsuit.

What information is included on a certificate of insurance in Canada?

Established in 1981, the Canadian Standards for Insurance Operations (CSIO) is a national organization that creates and maintains consistent documentation and processes for the Canadian insurance industry. CSIO forms help simplify insurance processes by standardizing them. The electronic CSIO certificate of insurance includes the following key details:

• Your name
• Your business/organization name and address
• Your policy number
• Your policy’s start and end dates
• The type of coverage you have
• Your coverage limits
• The name of your insurance company
• The contact information of the broker or agent that issued your COI
• The name and address of any additional insured

How a certificate of insurance works

Certificates of insurance (COIs) are often required in business situations as a form of risk management where liability and the risk of significant losses are a concern. A COI serves as proof of appropriate insurance coverage and is commonly used in most business contexts.

It’s important to note that a COI isn’t a formal contract between the two parties. It’s simply proof that coverage exists, but it doesn’t create any contractual obligation between the certificate holder and the insurance provider.

Small business owners and contractors typically carry a COI to show they have liability insurance, which covers them in case of workplace accidents or injuries. When you buy liability insurance, the insurance company usually provides you with a COI.

Ideally, you’ll have a contract in place with the other business that spells out everyone’s insurance requirements and responsibilities, including any COI requirements.

If you don’t have a formal contract, make sure to obtain a COI from the business or contractor that lists your organization (with the full legal name and address) as an additional insured party. If your organization is added as an additional insured on the other party’s COI, an official endorsement should be issued to amend their insurance policy accordingly.

What are the types of certificates of insurance?

As we mentioned earlier, a certificate of insurance (COI) gives an overview of the insurance policies held by the insured party. It includes details like the insurance company's name, policy number, policy dates, coverage limits, and the types of risks covered. There are different types of COIs, each one aimed at the type of coverage you need. Here are some of the most common types:

General Liability

A certificate of general liability insurance protects businesses from claims related to property damage or personal injury that happens on their premises. CGL also covers claims related to advertising injury. This insurance helps with costs like damages, legal defence, and settlements.

Businesses often need this as proof of general liability insurance. This certificate also ensures that the project owner, manager, and/or lender are listed as additional insured. It should include the names and contact information of all insured parties and a description of the work.

Professional Liability

A certificate of professional liability insurance, also known as errors and omissions (E&O) insurance, protects professionals like doctors, lawyers, accountants, and consultants from legal claims related to mistakes or oversights in their work. It covers legal fees, settlements, and damages if your negligence or errors result in a client's financial loss. Companies that offer services or advice often need this as proof of professional liability insurance.

Auto Liability

A certificate of auto liability insurance covers damages from accidents involving your business vehicles. It can help with medical expenses, liability, and property damage that occur while using company vehicles. It should include a list of the insured vehicles, which coverages you have, and how you were rated for your insurance premiums.

Businesses that own or operate vehicles need this certificate as proof of commercial auto insurance. In some provinces, driving without a certificate of auto insurance is treated as seriously as driving without a licence.

Workers' Compensation

A certificate of workers' compensation shows coverage for employees' work-related injuries or illnesses. It covers claims resulting from workplace injuries, including medical care, lost wages, and rehabilitation. This type of COI should follow the laws of the province where the project or event is taking place. Employers typically require this as proof of workers' comp insurance.

What are some of the elements found in a certificate of insurance?

Reading a certificate of insurance (COI) can seem confusing at first, but it gets easier once you know the basics. To help you make sense of any COIs you issue or receive, here are some of the key elements you'll come across:

Additional insured

Any individuals or businesses that receive protection from the insurance coverage of another policyholder

Certificate holder

The person or business requesting the certificate of insurance

Coverages

A description of the kind of coverage the policy offers the insured parties

Effective and expiration dates

The start and end dates of the insurance coverage

Endorsement

Also known as a "rider," it's an add-on that provides extra coverage to an existing policy

Insured or Policyholder

The person(s), company, or policyholder(s) covered by the insurance policy

Insurer or Producer

The issuing insurance company

Policy number

A unique number given to the policy by the insurance company

When is a certificate of insurance required?

There are plenty of situations where you might need a certificate of insurance (COI). For instance, if you're a general contractor bidding on a job, a COI is often required to show potential partners or clients that you're insured. Or, if you're working or hosting an event at a property that isn’t yours, the property owner may ask for proof that you’re covered. Having a COI can also give you a competitive edge when trying to land a contract or new business.

Let's give you a more detailed example. Let's say, instead of being the one hosting, you're letting a company called “Bigger Than Life (BTL) Entertainment” host an event on your property.

As the property and business owner, to avoid being held responsible for any damages, losses, or claims from their event, you would ask BTL Entertainment for an insurance certificate.

In this case, BTL Entertainment would need to work with their insurance company or broker to extend their liability coverage to include the event. Your company would be added as an "Additional Insured" on BTL’s insurance policy, but only for the duration of the event. The COI would show what coverage is provided to your company as the Additional Insured under specific conditions.

BTL’s insurance company would then issue the COI, listing your company as an Additional Insured. BTL Entertainment would give you the certificate, proving they have coverage for the event and that you’re included as an Additional Insured for any potential damages, losses, or claims. It’s a good idea to share this certificate with your insurance company for their review. This way, any responsibility for damages falls on BTL Entertainment, not your company, since you’re simply providing the venue or service for their event.

Ensure your peace of mind today—contact BrokerLink to obtain your certificate of insurance. Our dedicated team is ready to guide you through the process and ensure you have the coverage you need. Don't wait; secure your policy now with BrokerLink!

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What is a certificate holder?

A certificate holder is an individual or organization listed on a certificate of insurance (COI) as having an interest in the insurance coverage. When a business or individual gets a COI from their insurance provider, they can name certificate holders, such as clients, customers, landlords, vendors, or other parties they have a legal or contractual relationship with. By listing these entities, the policyholder gives them proof of insurance and shares the details of the policy.

Certificate holders usually have access to important information like policy limits, coverage types, and effective dates. If there's a claim or potential liability, the certificate holder may be notified by the insurance provider and could have certain rights or responsibilities related to the policy. We will explore the distinction between a certificate holder and an additional insured below:

Certificate holder vs. additional insured

An additional insured is covered by your insurance and can file a claim if necessary, while a certificate holder is just informed about your coverage and can't file a claim. Put simply, the additional insured gets protection under your policy, but the certificate holder does not.

How do you get a certificate of insurance?

If you're asking a contractor or business for a COI, they should be able to get it from their insurance company or give you their insurer's contact info so you can request it directly. However, be cautious when asking for a COI—there have been cases where contractors submitted fake ones. It's always a good idea to double-check with their insurance company. Also, be sure to check the COI for the correct business details, expiration date, and effective date.

If you own a business and need to provide a COI, contact your insurance broker or an insurance agent at your insurance company. You'll need to add the business or client as an additional insured to your policy for the duration of the business contract or event. Your broker or agent will then issue you the updated certificate of insurance. Keep one copy for yourself and give another to the requesting parties.

What issues can come up with a certificate of insurance?

There are a few common issues that can come up with certificates of insurance. Addressing these problems can help both the insured and requesting parties avoid potential risks and conflicts. Read further to learn more:

Outdated or expired policies

If the insurance policy has expired or isn’t up to date, the certificate holder could face legal and financial risks.

Inaccurate or incomplete information

If the details on a COI aren’t correct or fully filled out, it can cause delays, confusion, compliance issues, or disputes.

Misunderstanding of requirements

Insurance needs can be complex, so it’s important for the insured party to understand and meet the requesting party’s requirements to avoid disputes, delays, or liability issues.

Delayed delivery

When it takes too long for the insured party or their agent to provide the COI, it can create complications. It can take anywhere from a few days to a couple of weeks to get a COI, so planning ahead is really important.

What should I look for when presented with a certificate of insurance?

We’ve included a checklist below to ensure all of the appropriate details are included in the certificate of insurance presented to you by a third party:

• Issuing brokerage name and address: confirm this is on the certificate.
• Insurer: shows the insurance company name that provides coverage for the named insured.
• Insured: shows the legal name and address of the company or organization insured who is providing you with the certificate.
• Commercial General Liability: this section will display the following items. These items including:
  • Policy number.
  • Effective and expiry dates.
  • Limit of Liability: Note the limit of insurance will vary from policy to policy. When reviewing the certificate, you need to ensure that you feel the limit of insurance is adequate for the exposure that is presented by the activity taking place.
  • The occurrence limit and aggregate limit indicated.
  • Cross-liability clause indicated.

Any other coverages that might be applicable will also show on the certificate of insurance with the same information as above (e.g., excess limits or umbrella limits):

• Description of operations, locations or special items list the event, dates of the event and activities taking place during the event. It will also show any special provisions relating to the event coverages.
• Additional insured status indicated
  • Certificate Holder: This section needs to show your full legal name and address
  • Cancellation: The policy needs to have a 30-day notice of cancellation clause
  • Authorized Representative: Ensure the certificate is signed and dated

BrokerLink is here to help!

Not sure if you need a certificate of insurance (COI) or how to get one? BrokerLink’s business insurance specialists are here to help. Whether you need a COI or any other insurance documents for your business, visit us online, give us a call, or stop by any one of our local branches throughout Canada to get started.

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FAQs for what is a certificate of insurance

Is a certificate of insurance the same as a business insurance policy?

No, a COI isn't the same as your full business insurance policy with an insurance company. It's just a simple, one-page document that proves you're insured if you need to show it to a business or client.

How long is a certificate of insurance good for?

Always keep any COI you receive indefinitely since you never know when an issue might come up from work done on your property or a job you completed for someone else. Having proof of the COI on hand will make it easier to handle any problems that arise later on.

When should I ask for a COI?

Make sure to ask for and get a COI before anyone starts working on your home or property. If you have a written contract, it should outline the insurance requirements, including the necessary coverage and coverage limits, which the COI will confirm.

How much does it cost to get a COI?

A COI doesn’t cost anything beyond your regular insurance premiums. However, some jobs or projects might require more coverage than you currently have, in which case you may need to pay extra for endorsements to increase your coverage and its limits.

What is the difference between a certificate of insurance and an insurance policy?

While insurance policies are detailed documents outlining your contract’s terms, coverage, and limits, certificates of insurance (COIs) are simplified summaries. A COI includes only the key details, like the policyholder's name, coverage dates, type of coverage, limits, and insurance carrier. It doesn’t change or modify the terms of the actual policy.

If you have any questions, contact one of our local branches.