Certificate of Insurance (COI)

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Updated August 9, 2020

What Is a Certificate of Insurance (COI)?

A certificate of insurance, or COI, is issued by an insurance company or insurance broker. The COI summarizes the details and conditions of the policy, including effective dates, types and limits of coverage, and ownership. It is most commonly used to verify insurance coverage.

How a COI Works

The insured pays the insurance policy premium and requests the certificate of insurance. A COI is often used to verify coverage for liabilities that may be incurred by an entity while fulfilling a business contract. Clients often require such proof of insurance, especially in higher-risk jobs such as roofing. When a customer requests a COI, their name then appears on the certificate, requiring the insurer to notify the client of policy cancellations. 

COI Example

For contracted work where significant liability may be incurred, clients need proof that a contractor is “covered” for any possible liabilities. The COI provides proof that the company holds the proper insurance coverage.

So, for example, the construction of a large parking lot may be contracted to a company that will demolish, pave, and rebuild the lot. In doing that work, they could incur property damage or injury to workers. Construction would not begin until they can prove that they are covered, hence the need for the COI. 

The Importance of Certificates of Insurance 

Without insurance, which is confirmed by a COI, a company or contractor will have difficulty securing contracts as most clients will not want to assume the risk of any costs or liabilities that the contractor could cause in the course of business.