What is a Certificate of Insurance (COI) and Do I Need One?

6/16/2020

Quick Take: Why did the coverage on my home increase this year? - A COI is a statement of coverage issued by the company that insures your business. - Usually no more than one page, a COI provides a summary of your business coverage. - It serves as verification that your business is indeed insured. - Potential clients may request a COI as a condition of doing business with you.

Question I'm a small business owner, and I visit my clients' offices often—I pretty much live on the road. Here's my challenge: I really want my clients to know my business is insured. (Other competitors in my area may undercut my price, and my gut tells me it's because they may not be insured.) Is there an easy way to let my customers and clients know I'm insured?

We posed this question to Ron Henderson, a Farmers Insurance® agent based in Palm Desert, California.

Answer Yes, there's an easy way — and it starts with something called a Certificate of Insurance, or a COI for short.

What is a COI? It's like an auto insurance ID card, with one key difference: It summarizes your business insurance coverage, and contains important basics like policy expiration date, individuals covered, and dollar amount of coverage. Some COIs also include the type of policy, such as professional or general liability.

So rather than showing a multi-page insurance contract for your client, a COI—which can be included with proposals or affixed to the clipboard you carry—is an easy shortcut to prove you're insured. I've heard from my business insurance clients that COIs often help build confidence in their business, much like online reviews and references.

Here are a few of the most common questions I field from business owners about Certificates of Insurance:

What types of businesses need a Certificate of Insurance?

I often get asked, "Does my restaurant need a COI? My nail salon? My repair shop? My tech company?" It really depends on the needs of your business and customers. I realize that sounds broad and vague, but pretty much any business that provides a service or performs work with a potential for high liability losses could be asked to show a COI.

For example, if you run a popular burger joint, a company with a fleet of cars or trucks, or a tech company with access to a network of other business's computers, you may be asked to produce one. A business or individual that hires your company to do work—whether it's building an e-commerce website or painting the office—may also require proof that your business can cover the cost of a liability claim. In other words, just about any business where an employee, customer or another business could be hurt or lose money.

I also know some businesses often include a COI with the proposals they submit for a job or contract—it could be required as part of the bidding process, and it also may give the business an edge over the competition if they don't have similar coverage.

Read the rest at Farmers.com.