What is a Certificate of Liability Insurance?

February 28, 2024 | Insurance 101

This article was originally published August 23, 2022

If you’re wondering, “What is a Certificate of Liability Insurance?” or “What is a COI?” which is short for Certificate of Insurance, it’s a document that proves you purchased an insurance policy that protects you from business liability.

Also sometimes referred to as a liability insurance certificate or certificate of liability insurance form, it typically includes:

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    The name of your insurance company
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    The named insured on the policy—meaning the entity or individual that the policy covers
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    Details on coverage amounts and limits
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    The policy effective date

A Certificate of Liability Insurance may also indicate any additional insureds on the policy. These are other organizations or people who are covered under the policy in addition to the policyholder.

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Small business owner viewing her COI on a phone

What Is Liability?

In order to understand liability insurance (like general liability insurance or professional liability insurance) and the function of Certificates of Liability Insurance, you need to understand liability. Legal liability refers to your business’s responsibility under law for any injuries or losses your business causes to others.

For example, if you’re a contractor and you damage a customer’s property, you may be liable for the cost to repair or replace it. Or, if you provide incorrect professional advice to a client and their business suffers a financial loss as a direct result of that advice, you may be financially responsible for that loss.

The Certificates of Liability Insurance that you have for your business insurance policies prove that you have coverage.

When Would I Need a Certificate of Liability Insurance?

A Certificate of Liability Insurance may be required for multiple reasons, including:

  • As a subcontractor, you need to prove you have insurance.General contractors (GCs) typically require the subcontractors they hire to show that they have liability insurance because if they don’t have coverage, losses for which they’re responsible can fall back on the GC.
  • You’re seeking certain professional licenses that require liability insurance.For example, in your state, a real estate agent may be required to have professional liability insurance.
  • Your client requires that you have liability insurance.In some instances, a company for whom you’re doing work may require that you have certain insurance coverage before you can get started on the project.
  • You need insurance in order to sign a lease.Your landlord may require you to prove you have insurance before you sign a lease for space for your business.

Proving Coverage for Damage Liability and More

Collecting Certificates of Liability Insurance from companies you partner with is important in many industries. It’s crucial for contractors, in particular. 

It’s common to think of liability in terms of property damage and to hope that it’s likely to amount to a few thousand dollars at most. However, liability for injuries can easily be in the tens of thousands of dollars or more. 

For example, if a subcontractor leaves a tool on the floor at a worksite and a client trips over it, falls, and breaks their arm, the medical costs associated with the incident can be very high. If, as a GC, you haven’t obtained a Certificate of Liability Insurance for the subcontractor that is responsible, that claim can go against your insurance. 

And, even if your insurance company pays the cost, the incident becomes part of your claims history and can affect your insurance rates down the road.

What Does a Certificate of Liability Insurance Cost?

With biBERK small business liability insurance policies, there’s no additional cost—beyond the cost of your insurance—for a Certificate of Liability Insurance. The COI is simply available to you should you need to prove you have coverage.

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What’s the Process for Getting a Liability Insurance Certificate?

Getting a Certificate of Liability Insurance for a biBERK small business policy is simple. All you have to do is visit the Certificate of Insurance (COI) page of our website, click Get a Certificate, and follow the instructions. 

On the same page is a link for getting a quote on other policies if you need additional types of coverage.

3 Things to Look for on a Subcontractor’s Certificate of Liability Insurance Form

If you obtain Certificate of Liability Insurance forms from other businesses or individuals you work with, like subcontractors, there are three things you should check:

  1. Are the other party’s insurance limits at least equal to yours? You don’t want to discover that they have purchased a bare-minimum policy. They should have adequate coverage since if a claim exceeds their limits, the individual or organization seeking damages may look to you to pay the balance.
  2. Does the Certificate of Liability Insurance have a waiver of subrogation clause? This clause means that the other party’s insurance company won’t come after your insurance company to help pay for a loss. It’s another way to ensure that you don’t end up paying for claims you shouldn’t be responsible for.
  3. Is your business listed as an additional insured on the other party’s policy? You want to be listed for situations such as when a subcontractor’s faulty work results in a lawsuit and you are named in that suit. If you’re listed as an additional insured, their insurance can respond and protect your business.

Make Obtaining Liability Insurance Certificates a Standard Practice

It’s a smart business practice to get liability insurance certificates for your biBERK liability insurance policies and those of the companies or individuals you partner with. That way, you can be confident that your business is fully protected should an incident occur.