Certificate of Liability Insurance – What is it and Why do I Need it?

August 28, 2017

If you own a small business, general liability insurance protects you if there’s an accident or injury in your workplace or caused by one of your employees. A certificate of liability insurance (COI), also known as an ACORD certificate of liability insurance, serves as proof of your insurance coverage.

Liability Insurance

This is known as commercial insurance and protects you in the event you are sued for claims that come within the coverage of your liability insurance policy. There are three types of liability insurances and the type of insurance you choose depends on the details of your business.

  • General liability insurance also known as commercial general liability (CGL) protects your business from another person or business’s claims of bodily injury, associated medical costs and damage to property.
  • Professional liability insurance sometimes called errors and omissions insurance (E&O insurance) is coverage for another person’s claims against businesses that provide professional and personal services.
  • Business owners policy (BOP) is a combination of general liability and business property insurance.

What is a certificate of liability insurance?

A certificate of liability insurance is a one pager that provides policy details on your liability insurance coverage, verifying that you have the professional liability insurance, general liability insurance, or business owners policy you claim to have. The details it shares include the types and limits of coverage, the issuing insurance company, your  policy number, the named insured, and the policy’s effective dates

Why do I need a certificate of liability insurance?

Sometimes referred to as a certificate of liability insurance or acord certificate of liability insurance, it is often required in order to win contracts. This way, your potential client can know for sure whether you have business insurance. Many companies and individuals that hire contractors need to know that they won’t be held liable for damages, injuries, or substandard work, and therefore require that you have insurance.

How is a certificate of liability insurance issued?

The certificate of insurance is issued along with your policy and should be one of the documents your receive when you purchase insurance for your business.

Why is my client asking to be added to my certificate of liability insurance?

Don’t be alarmed if the client also requests that they be added to your certificate as a certificate holder. This is a common request, and complying does not give them any legal rights under a certificate, because the certificate simply establishes that an insurance policy exists.

How quickly can I get a certificate of liability insurance?

If you need a certificate of insurance to fulfill a contract requirement or would just like to have a copy on file, contact your insurer. When you purchase small business insurance from Hiscox a certificate of insurance is included in the docs you receive upon purchasing your policy.

Related Reading: Why do marketing and media consultants need small business insurance