What Is a Certificate of Insurance (COI)?
Certificates of insurance (COIs) are a topic that comes up constantly in the small business space — from what they are and why you need them to how to access them. With that in mind, I thought I’d give you all a rundown of these important documents.
A certificate of insurance is essentially proof that you have active business insurance coverage. Think of it as an insurance ID card for your business that shows your coverage details at a glance.
As far as what information appears on a COI, these certificates typically include:
- Your business name and contact information
- Your insurance company's name and contact details
- Policy numbers and effective dates
- Coverage types (general liability, workers' comp, etc.)
- Coverage limits for each policy
- Any additional insureds listed on your policy
- Special conditions or endorsements
Most COIs follow a standardized format created by ACORD (Association for Cooperative Operations Research and Development), which is why they're sometimes called "ACORD certificates."
Now on to the next question: why are COIs so important for businesses?
From what I've seen helping business owners, having quick access to your COI can be the difference between landing a job and losing it. Here are the main situations where you'll need to provide your COI:
- Bidding on contracts: Many clients require proof of insurance before even considering your bid.
- Signing commercial leases: Landlords typically require tenants to show proof of coverage.
- Obtaining business licenses: Some municipalities require COIs for certain professional licenses.
- Working on client property: Most clients won't let you step foot on their property without verification of insurance.
- Forming business partnerships: Potential partners want to ensure you're properly covered.
The construction industry is particularly COI-intensive. Based on our data, the average construction business shares certificates almost 200 times annually.
I also often hear the question, “What does ‘additional insured’ mean on a COI?” Basically, this means another party is covered under your policy for incidents related to your work. For example, if you're a contractor and accidentally damage a client's property, both you and the client (as additional insured) would be protected by your policy.
When a client asks to be added as additional insured, they might also request specific endorsements like:
- Waiver of subrogation
- Primary and non-contributory status
- Completed operations coverage
The traditional process for getting COIs used to be slow and frustrating, requiring calls to agents, waiting days for paperwork, and sometimes paying fees for each certificate. This could mean losing jobs while waiting for documentation.
Modern insurance providers have streamlined this process with digital certificates that can be accessed, customized, and shared instantly. This has been a game-changer for small businesses that need to respond quickly to opportunities.
NEXT also has a COI analyzer that makes it even easier to generate a personalized certificate of insurance for every job.
Have any of you run into issues with certificates of insurance in your business? I'd be curious to hear your experiences.
Posted Mar 21, 2025, 6:21 AM UTC