A Guide to Understanding Business Certificates of Insurance

Posted on January 15, 2021

In this article, we will explore Certificates of Insurance (COI) for businesses.  There is a lot of confusion over the intent of a COI and what they represent.  In short, a certificate of insurance is a one-page document that identifies some key information on your insurance policies.  They are typically used to show proof of insurance to a potential client, vendor, or landlord.

What is on a Certificate of Insurance?

A typical Certificate of Insurance will display:

• Business name and address
• Each type of coverage (General Liability, Workers Comp, Umbrella, Professional Liability) along with the following for each policy:
  • The insurance company
  • Policy number
  • Effective dates
  • Coverage Limits
  • Identify an Additional Insured
  • Note if Waiver of Subrogation is included
• Description Box
• Certificate Holder

What Does a Certificate of Insurance Do?

Showing proof of insurance is often required to meet requirements to obtain a contract with a client.  It provides the client with some confidence the business with whom they are about to entered into a legal agreement has protected themselves against claims of bodily injury, property damage, or other types of negligence.  Often a landlord or equipment leasing company will request a COI as proof of insurance.

It is important to understand a Certificate of Insurance is just a snapshot of coverage at the time it is produced.  There is guarantee the coverage will be in place at any point in the future including if there is a claim.

Certificate Holders and Additional Insureds

The other party will be listed as a certificate holder.  There is no additional coverage afforded to a certificate holder, this is simply the entity receiving the certificate.  Occasionally a client may ask to be listed as an Additional Insured.  This request can accompany a request for a certificate but is not always required.  Adding the other entity as an Additional Insured can affect your coverage and premium.  Additional Insureds are afforded coverage under the existing policy but are not responsible for the premium.  It is important to discuss the repercussions for adding and Additional Insured to a policy with a licensed insurance agent before making the request or agreeing to provide it.

Waiver of Subrogation and Description of Operations

If a waiver of subrogation is included or allowed in the policy, there is a box which can be checked on the certificate to denote this for the certificate holder.  This coverage must be included on the policy or added by endorsement and cannot be checked simply if requested.  In some cases, the coverage may not be available on a specific policy.

The Description Box may be used to further clarify the operations or specific coverages.  It can list out locations or clarify additional coverages required by a certain certificate holder.

Can I Make Changes to my Certificate?

You should never edit a certificate of insurance.  This document is not an actual insurance policy and does not serve to provide, endorse, extend, or alter the terms of an insurance policy in any way.  It does not constitute a contract between the issuing insurer, authorized representative, or producer and the certificate holder.  Any edits you make to the document could be considered grounds for breech of contact and potentially insurance fraud.

If you need any adjustments to your certificate, you need to request them through your insurance agent.  The agent needs to make sure the adjustments are reflective of the actual policy.

The most relevant Massachusetts General Law in regard to Certificates of Insurance is Massachusetts General Laws Chapter 175L (“certificate law”).  You can read the Ten Points To Know About Massachusetts’ Certification Of Insurance Law or the actual text of the law here.

How Do I Obtain a COI?

Obtaining a COI is a simple process.  If you are a client of Aronson Insurance, you can contact your account manager or simply email Certificates@AronsonInsurance.com.  If your business insurance is with another agent, they should have a similar process to obtain a certificate.

When sending along the request, it is important to include:

• Legal name of entity requesting the certificate
• Full address
• Additional language request
• Email or fax number where to send the completed certificate.

Understanding your current insurance limits and how they apply to a request for a certificate of insurance is something best discussed with a licensed insurance agent.  If you have any questions on your coverage or on certificates of insurance, please contact Aronson Insurance at 781.444.3050 to review.

Headed into our 102^nd year, we are excited to continue to locally serve our Massachusetts businesses through our specialized knowledge and personalized products.  Contact us today to discuss your current or future insurance needs.