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What is a Certificate of Insurance (COI)? A Complete Business Guide
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- A Certificate of Insurance is a document that provides evidence of your insurance.
- It typically outlines the key covers provided, policy numbers, insurance company, amount of cover offered, and is provided either by your insurance broker or insurer.
When are Certificates of Insurance required?
A COI might be requested in various situations, such as when entering into a contract or agreement. For example, contractors or service providers may be required to provide a Certificate of Insurance to demonstrate that they have the necessary business insurance to protect against potential risks or liabilities associated with their work.
Many companies will not engage with a third-party unless they are able to demonstrate they have purchased minimum amounts insurance.
Compliant Certificate of Insurance
A COI should be clear, accurate, and aligned with the underlying policy documents. It should allow the requesting third party to verify that the insured business holds the relevant cover, for the correct period, with appropriate limits. The precise format can vary by broker, insurer, policy class, and contract requirement, but most commercial COIs contain several core components.
Insured Party and Broker Details
The certificate should clearly identify the insured business. This should usually include the legal name, and where relevant, any subsidiaries covered by the policy. This matters because contracts are often signed by a specific legal entity. If the certificate names the wrong company, omits a subsidiary, or only refers to a trading style, the third party may question whether the correct business is insured.
The certificate should also identify the broker or intermediary issuing the document. For advised commercial insurance, this is usually the regulated insurance broker responsible for arranging the policy or confirming the insurance details.
Policy Types & Limits of Indemnity
A Certificate of Insurance should summarise the active policy lines relevant to the request.
This may include:
- Public Liability Insurance;
- Employers’ Liability Insurance;
- Professional Indemnity Insurance;
- Product Liability Insurance;
- Cyber Insurance; &
- Commercial Crime Insurance.
The certificate should state the limit of indemnity for each policy section. For example, a client may require Public Liability of £2m, £5m, or £10m, Employers’ Liability of £10m, or Professional Indemnity at a specific contractually required level.
The certificate should also include the policy number and the period of insurance, including the start date and expiry date. This allows the third party to check that cover is active at the time services are provided.
Why are Certificates of Insurance important?
A COI provides the assurance that you purchase enough cover and gives your client the knowledge they have an insurance policy to claim against should something go wrong where they would seek to claim damages against your business.
They serve as a useful tool in risk management because they serve as tangible proof the business or individual has sufficient insurance in place. Many contracts will stipulate the need for insurance coverage to protect all parties involved. COIs provide a standardised way to communicate and verify compliance with these contractual requirements.
COIs assist in managing liability by clearly outlining the cover that is currently in force. This information is valuable to each counterparty in understanding how potential risks are mitigated and how liability may be distributed among parties involved.
Additionally, there are certain industries or regulatory bodies that have specific insurance requirements. COI’s help businesses demonstrate compliance with these regulations and maintain good standing within their respective industries.
Not to mention the COI’s can build trust between parties when there is a significant difference in size. It demonstrates a commitment to responsible risk management and financial responsibility. Companies that can’t obtain the required levels of insurance from reputable carriers with an ‘A rating’ from AM Best should be avoided.
Why shouldn’t you share your Schedules and Policy Wordings with a third-party?
It is advisable that you do NOT share your insurance schedules and policy wordings with a third-party which may later seek to claim against you.
Given you will have a legal obligation to protect your insurance companies’ interests, if you assist the bringing of a claim against your insurance cover, you could find your insurance company later seeks to deny a claim leaving you without cover.
How to obtain a COI?
Speak to your insurance broker in the first instance, they will be able to provide you with a letter that will meet the requirements of your counterparty or regulator. If you don’t have cover in force, give one of our experts a call or arrange a call-back to discuss your requirements.
People Also Ask
Should D&O cover be included on our Certificate of Insurance?
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D&O Insurance is not normally included on a standard Certificate of Insurance unless an investor, lender, regulator, board stakeholder, or transaction counterparty specifically requires evidence of management liability cover. Unlike Public Liability, Employers’ Liability, or Professional Indemnity Insurance, D&O protects directors, officers, and senior decision-makers against claims arising from the management and governance of the business. Because the policy may contain sensitive information, it is usually better to evidence D&O separately and only where there is a clear commercial requirement to do so.
Can a Certificate of Insurance change the policy cover?
No. A COI should not amend, broaden, or override the policy. If the certificate says something inconsistent with the policy, the policy wording and schedule will usually govern the actual cover position.
Can Certificates of Insurance be validated?
Yes. If you would like to check the details of a counterparty for which you have received a COI are up to date, you can email certificates@getindemnity.co.uk
Is passionate about leveraging his knowledge and experience of professional risks to the benefit of his clients. With over 2 years experience, he possesses a keen analytical mind and a strong dedication to client service, and data management. Currently studying to become a Chartered Insurance Broker, his ability to understand complex risk scenarios and provide strategic solutions makes him a valuable asset to any team.
A respected senior industry professional and a Chartered Insurance Broker with over 20 years’ of experience in the commercial insurance sector as an underwriter, broker and director. previously held senior positions at Willis, QBE and Chubb said: “Customer preferences are driving change and insurance brokers have a significant part to play in delivering effective solutions."
