Now It’s Even Easier to Get a Certificate of Insurance
A Certificate of Insurance serves as proof of insurance when a business needs to show they have liability coverage.
Who Needs a Certificate of Insurance?
Business owners who need to show proof that they have the appropriate insurance coverage before being awarded work can do so by providing the interested party a certificate of insurance. Likewise, business owners who hire third party businesses to work for them often require the third party to present a certificate of insurance as proof they are appropriately covered. If your business is hired to do work, your customer may ask you for a certificate of insurance as proof your company is insured for the work you are to perform. Some companies may require a certificate of insurance before contracts can be signed or work commences.
What Is a Certificate of Insurance? What Is Proof of Insurance?
Proof of insurance is documentation that verifies a business has active insurance coverage. A certificate of insurance is typically issued by the requested party’s insurance company as proof that the requested party’s insurance is valid and up-to-date.
The certificate of insurance usually contains some details about the requested party’s insurance coverage. This way, the party hiring can see what types of insurance and the coverage limits the requested party has, to ensure it is suitable to cover the work described in their contract.
Why Is a Certificate of Insurance Important?
A certificate of insurance is important because it proves that the requested party has liability coverage to help protect the hiring party from costs related to accidents caused by the insured.
For example, a construction company hires a subcontractor. The subcontractor accidentally causes $200,000 worth of property damage while working on the job. If the subcontractor doesn’t have the right liability coverage, the construction company may have to pay for the damage.
Presumably, if the construction company had requested a certificate of insurance before hiring the subcontractor, it would have discovered the gaps in the subcontractor’s insurance coverage. The construction company could then make other arrangements or insist the subcontractor acquire adequate coverage and provide a new certificate of insurance as proof.
If an uninsured or underinsured contractor is injured while working on a job, the hiring company may be responsible for the contractor’s medical bills. Verifying that the contractor has the right insurance in place prior to starting the job can help ensure that the hiring company will not be made responsible for these bills.
Confirming, through a certificate of insurance, that a contractor has sufficient insurance can also help assure the hiring company that it will be compensated if the contractor doesn’t complete the job or does sloppy work. If this happens, the hiring company might be able to file a claim with the contractor’s insurance company.
Why Ask For a Certificate of Insurance?
It is important to ask for a certificate insurance when your business hires a third party. Before they do work for your company, you want proof that the third party is appropriately and actively insured. A certificate of insurance issued by their insurance company serves as proof to you that the party is validly insured. With it you can often verify the type and amount of coverage as well as the expiration date.
Common Certificate of Insurance Mistakes
One of the biggest mistakes you can make when hiring a third party is to accept a certificate of insurance that didn’t come directly from the insurance company. It’s possible for the third party to be mistaken about their insurance status and liability limits. If you receive a certificate directly from their insurance provider, you can see the limits of the coverage and expiration dates and be more confident they are accurate.
Request a certificate of insurance every time you hire or rehire a third party. Do this even if you’ve worked with the third party in the past and they had insurance then. It’s possible that the third party’s insurance has expired since the last time you worked with them.
Here’s a list of information to confirm when verifying a certificate of insurance:
- Make sure that the name of the person you’re hiring, or the company name, is an exact match on the certificate of insurance.
- Verify that the 3rd party’s insurance coverage meets the requirements for the job.
- Confirm that the dates of coverage have not expired, and will not expire, during the job.
- Last, ask to be added as an additional insured on the policy until the job is completed.
Request a Certificate of Insurance
Requesting a certificate of insurance is easy. In most cases, The Hartford can process an online request in under 4 hours.