When you are approved for an insurance policy, the insurer will provide you with a document called certificate of insurance. What is it? How important is it? These questions may come to your mind. In simple words, the Certificate is a document issued by an insurance company to prove the existence of insurance coverage. It includes the specific conditions that are granted for the individuals listed in the document.
Importance of the Certificate of Insurance
For personal client, certificate of insurance is important to prove that you are covered by specific conditions. However, it is actually more important for business owners or contractors. The Certificate may influence whether they can win a contract or not. Project owners commonly prefer a contractor that has liability.
When working with a certificated contractor, the client or project owner will not be held liable for possible bodily injuries or property damages related to the contract. In situations, in which losses and liability are a concern, the certificate will be demanded. The certificate is commonly classified into the types of insurance coverage. They include general, umbrella, worker’s compensation, or auto insurance certificate.
Information in the Certificate of Insurance
Clients or project owners usually request the certificate from the insurer rather than from the contractor. They typically need to confirm validity of information in the certificate, which includes the following:
- Name and address of the certificate holder
- Effective date of the policy. In case that the certificate is going to be expired before the job completion, the client may ask for another certificate
- Name of the insured. The clients need to ensure exact match of the names listed in the certificate, whether they are company name or personal names
- Type or insurance coverage
- Dollar amount of applicable liability
- Policy number
In conclusion, ownership of a certificate of insurance is a must, particularly for business owners. The document can increase their bargaining power as it proves that the company pays attention to its workers and assets.