What’s the Difference Between my General Liability Policy and Certificate of Insurance?

General Liability insurance protects your business from third-party claims of injury and property damage. In many industries, a certificate of insurance (COI) is commonly required by a client before work on a project or new business deal can begin. COIs are common in industries where work is regularly contracted out.

A COI is a one-page document that includes the details of your insurance policy, including coverage limits, a policy number, effective dates, the name of your company, and the name of the insurance company issuing the policy. It basically serves as a verification that you have the insurance you say you do, but in a much more concise manner than the actually policy document. COIs can be issued for a variety of policies such as umbrella insurance and workers compensation insurance, depending on your industry and the job at hand.

It’s important to note that a COI does not specify any terms of your contract with a business. It’s only a piece of paper providing proof that you have insurance, with basic policy information included. 

So how does a business owner determine if and when they need a COI?

If you are conducting work on another’s property – say, for example, as a contractor – you’ll probably be asked to provide a COI. In fact, a COI is often necessary to win customers and contracts. Businesses who hire subcontractors often require COIs, with themselves named as an additional insured and minimum coverage limits, to make sure they are protected from any liability in the case of property damage, personal injury or other events.

Some examples of when your business might need to provide a COI include:

  • You own a construction company and have employees conducting work on client sites.
  • You operate vehicles or transport goods in your business. If you own a trucking company, for example, you may need to provide a COI to shippers or other entities.
  • You freelance in the “gig economy.”
  • You own an event company that hosts events at various venues. Each venue is likely to request a COI for each event you hold.

You can request a COI once your policy has been issued from your broker, or through CoverWallet’s insurance management platform. This platform allows you to track all policy documents online, as well as request and manage certificates of insurance.

Requesting certificates of insurance

While you might be asked to provide proof of insurance when hired for a job, as a business owner you could find yourself on the other side of the fence, requiring a COI from a contractor you plan to hire. As a best practice, a business should request a COI from a contractor for each job they perform – even if they have a personal relationship and believe the contractor is insured.

When requesting a COI from a contractor, you’ll typically send them the particular information that needs to be stated within the document (your business details, limits, etc). Then, once you’ve received the COI, you’ll want to look it over to make sure the information aligns with your expectations. Here are some things to look for:

  • Make sure the name listed as “insured” matches the name of the company you’re doing business with exactly.
  • Check that the coverage limits comply with any specified in your contract.
  • You should also double check the policy coverage dates to make sure they are current and will not expire during the project. If they will expire, you’ll need to request another COI at that point.
  • Some COIs are produced specifically for a certain job, and may list things like the name of your company as an additional insured. Double check these details to ensure they are correct.

If the nature of your business requires you to collect a high volume of COIs, tracking and managing this information yourself can become difficult. Tools such as CoverWallet can automate the process, ensuring you have COIs on hand for each project you hire contractors for, and that you’re notified if coverage is insufficient or the COI has expired. A COI mistake or oversight could be very costly in the end.