Depending on the kind of business you have, your business may need to be able to provide proof that it is insured. Often this situation arises by contract, in which your business may be required to provide another company with a certificate of insurance. For example, if your business enters into a contract with ABC Co. to provide landscaping services, ABC Co. may require you to prove your business is insured. Your business can provide proof of insurance through a document called a “certificate of insurance.”
A certificate of insurance is a piece of paper, usually one page, which serves as proof that your business is insured. The certificate of insurance will contain certain information regarding the insurance issued to your business, including your business’ name and address, the types of insurance provided to your business commercial general liability insurance, automobile liability insurance, excess or umbrella insurance), the names of the insurance company(ies) insuring you, the dates of coverage, the policy number and policy limits.
A certificate of insurance is issued to a “certificate holder.” So, if your contract with ABC Co. required you to provide proof that your business is insured, you can ask your insurer to provide ABC Co. with a certificate of insurance. The certificate of insurance will list ABC Co. as the “certificate holder.” However, the certificate of insurance does not make ABC Co. an insured under your policy. If a person or business wants coverage under your insurance, a certificate of insurance does not provide that coverage. Even if the certificate of insurance is issued to ABC Co. as the certificate holder and states that the certificate holder is an “additional insured,” ABC Co. will not necessarily qualify as an additional insured unless an endorsement in the policy provides such coverage. For more information on “additional insured” coverage, see our article on that topic. [insert link]
The certificate of insurance will contain a statement that it is issued as a matter of information only and does not provide coverage. A policyholder or other person must look to the insurance policy to determine the scope of coverage – the certificate of insurance only shows that there is a policy in place insuring your business.
Thus, if you only need to provide ABC Co. with proof of your insurance, a certificate of insurance will do so. However, if you need ABC Co. to be insured under your policy, you will need to verify with your insurance company what you need to do in order for ABC Co. to be added as an additional insured under your policy.
When shopping for commercial general liability insurance quotes, keep in mind that purchasing commercial general liability insurance is important to your business so that your company can enter into business contracts.