A certificate of insurance proves the existence of an insurance policy and summarizes its primary features, including conditions.
What Is a Certificate of Insurance?
A certificate of insurance (COI) is a piece of paper that an insurance company or broker gives out that lists all the policies and coverage amounts. The COI is a summary of all insurance policies. It makes a list of the policy’s most important features and terms. A standard COI, for instance, includes the name of the policyholder, the date the policy starts, the type of coverage, the policy boundaries, and other important policy information.
How Certificates of Insurance (COI) Work
People use certificates of insurance (COIs) when they need to protect themselves from liability and big losses. This is usually the case in business. A certificate of insurance shows that you have protection across a multitude of scenarios – including property damage, negligence, or injury of a 3rd party.
Small business owners and workers often show a COI. It shows that they have insurance covering them in case of an accident or injury. When you purchase liability insurance, the insurance company typically provides you with a liability insurance document.
A business owner or worker might have trouble getting a job without an up-to-date COI. People and businesses hire contractors all the time. Therefore, the client wants to know if the business owner or contractor has liability insurance. This way, the client won’t have to take any responsibility if the contractor causes damage, injury, or poor work.
When leasing a commercial real estate property, it’s important to ensure that the landlord and tenants are both properly covered by insurance. A certificate of insurance (COI) provides evidence that such coverage is in place for a specific period of time. It will typically include information about the insurer, policy number, dates of coverage, and a list of covered risks. In this blog, we review some important information about COIs and provide you with a downloadable certificate of insurance sample.
How to Get a Certificate of Insurance
If you are requesting a COI from a contractor or business, they should either be able to retrieve it from their insurance company or provide you with their insurance company’s contact information. In this manner, you can request direct delivery of the proof. Be careful, however, if you ask your vendor to provide you with a COI. There have been documented cases of contractors submitting fraudulent COIs.
Similarly, your tenants should provide you with a certificate of insurance prior to taking possession of their space. They can provide this directly to you, the landlord, or they may have their insurance broker provide the appropriate documentation. Then, on an annual basis, as the COI expires, the tenant or the broker should provide an updated COI.
Who Needs a Certificate of Insurance (COI)?
Simply put, if you are hiring an independent contractor or business for their services on your property, you should require a certificate of insurance (COI). If you are a contractor or business, you should have a COI so you can prove to your clients that you are insured.
Most tenants will be required to provide evidence of insurance as well, particularly if they are running a business on the premises.
Sample of Certificate of Insurance (COI)
A certificate of insurance sample may include a description of the property and its use. It may also include details about the parties involved in the agreement and an authorization for additional insureds. These insureds are listed on the policy. The COI should specify the dollar limits of coverage for each risk.
It is important to note that a COI does not guarantee payment. Rather, it serves as evidence that an insurance policy exists and covers certain risks. However, it is still subject to the policy’s terms. For example, if there are exclusions in the policy or pre-existing damage was not disclosed, a claim may be denied even if a COI is presented.
Before signing any agreement, it is important to read the COI carefully. Make sure that it meets all of your requirements. If there are any discrepancies, do not sign the agreement until they have been resolved. A sample certificate of insurance (COI) is available online. Use it for reference and further guidance when preparing a COI for commercial real estate transactions.
Another thing to remember is that a COI does not mean you will get paid. Because of this, it is important to know the policy’s terms and conditions before depending on it to protect yourself. If you have any questions or worries about your coverage, you should call your insurance company to find out more.
To sum up, certificates of insurance give people who are buying or selling business real estate extra peace of mind. These papers show that you have enough insurance, and most lenders need to see them before they will give you a loan. It is important to know what information should be on the COI. This will help the transaction go smoothly. You can check that the COI is correct and up to date if you know what to look for. The COI is used to ensure the deal is fully protected.
Manage Certificate of Insurance with STRATAFOLIO
You may need a Certificate of Insurance (COI) in a number of situations. Generally, a tenant will request a COI directly from their insurance company. This confirms you have appropriate insurance coverage. If you are hiring a contractor, consider getting a COI from their insurance company, even if you have worked with them before. This is important because their coverage may have changed.
Schedule a demo today and learn how you can automate the tracking of tenant COIs through our system. With STRATAFOLIO, your tenants receive reminders for them to provide updated COIs to you so you are not continually having to track down new policies.
