What is a Certificate of Liability Insurance?
Are you wondering, “What is a Certificate of Liability Insurance?” or “What is a COI?” (which is short for Certificate of Insurance)? Many business owners and decision-makers do. It’s a document that proves you purchased an insurance policy that protects your business from liability costs.
This document goes by other names, too, including:
- Proof of liability insurance
- Certificate of Commercial Liability Insurance
- Liability insurance certificate
Whatever you call it, the COI for a liability insurance policy typically contains:
A Certificate of Liability Insurance for a small business might 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.
What exactly is liability?
To understand liability insurance (like general liability insurance or professional liability insurance and the purpose of a certificate of liability insurance for a small business, you need to understand what liability is in general. Here’s a simple definition: Legal liability is your business’s responsibility under law for any injuries or losses it causes others.
For example, let’s say you’re a contractor and you damage a customer’s property. You might 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 your recommendation, you could be financially responsible for that loss.
The Certificates of Commercial Liability Insurance that you have for your policies are your proof of liability insurance coverage.
When would I need a Certificate of Liability Insurance?
You might need a liability insurance certificate 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.
Do you need a Certificate of Liability Insurance?
People in many roles obtain Certificates of Liability Insurance for their biBerk policies. The owners of small to medium-sized businesses like to keep their COIs handy in case someone asks for them. They want to be able to quickly show they’re focused on risk management, including protecting their companies from the financial fallout of liability. They appreciate that if they haven’t obtained a particular Certificate of Commercial Liability Insurance yet, it’s easy to do so. And whether it’s the information on that certificate or in our policies, they like that we steer clear of confusing jargon.
You might also visit our website to get COIs if you’re responsible for complying with a requirement from someone like a landlord, who has you supply proof of insurance before you can sign a lease. In addition, if you bid for work, the client might require a COI from your company before they award you the project.
Ultimately, whether you’re a business owner, someone focused on legal compliance with landlords or business partners, or anyone tasked with proving your business has insurance, you’ll be glad that you can get COIs from biBerk quickly, efficiently, and free of charge.
Proving coverage for damage liability and more
Collecting a Certificate of Liability Insurance for a small business you partner with is really 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 the cost of any incident will be a few thousand dollars at most. But you can also be liable for injuries, and those lawsuits 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, if you need a COI for a liability insurance policy, there’s no additional cost—beyond the cost of your insurance. The COI is simply available to you if you need to prove you have coverage.
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
If you obtain Certificates of Liability Insurance from other businesses or individuals you work with, like subcontractors, there are three things you should check:
- Are the other party’s insurance limits at least equal to yours? You don’t want to discover that they’ve purchased a bare-minimum policy. They should have adequate coverage since if a claim exceeds their limits, the individual or organization seeking damages might look to you to pay the balance.
- 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.
- 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.
Now that you have an answer to the question, “What is a Certificate of Liability Insurance?” you know that it’s a smart business practice to get liability insurance certificates for your biBerk insurance policies and the policies of the companies or individuals you partner with. That way, you can be confident that your business is fully protected should an incident occur.