Certificates of Insurance (COI) continue to be one of our most frequently asked questions. Nowadays, businesses are quite familiar with them; however, there still seems to be some questions around their exact purpose and when it is required to have them issued.
“What is a Certificate of Insurance, and why is it important?”
Whether it’s a supplier/contractor who is often on site, or an organization that hosts events on your property, if you have business arrangements with another company, it is important to clarify whose insurance will respond in the event of an incident or loss.
A Certificate of Insurance is a document issued by an insurance company/broker used to verify the existence of insurance coverage under specific conditions granted to listed individuals.
It is important to realize that a Certificate of Insurance is not a formal contract between the two parties; it is an informational document showing proof of insurance. It also does not constitute a contract of insurance between the certificate holder and the issuing insurance company/broker.
Ideally, there is a contract between your organization and the other business that clearly outlines these insurance obligations and the Certificate of Insurance requirements. In absence of a formal contract, you should ensure that you obtain a Certificate of Insurance that shows your organization (full legal name and address) as Additional Insured (for a related blog, read: What’s the difference between Additional Insured & Additional Named Insured).
If Additional Insured status is granted to your organization on the Certificate of Insurance, an endorsement making the amendment to the other party’s insurance policy must be issued.
“When is it needed?”
It is needed anytime a third party comes on to your property or premises to perform a task outside of your control.
For example, a third party, let’s call them “Bigger Than Life (BTL) Entertainment”, is hosting an event on your company property. You don’t want to be liable for any damages, losses, or claims associated with their event, so you ask BTL Entertainment for a Certificate of Insurance.
So, BTL Entertainment would have to ask their insurance company/broker to extend their liability to cover the additional exposure from the event. Your company would be added as an Additional Insured on BTL Entertainment’s insurance policy, but only for the duration of the event (start and end dates) and outlining the coverage under specific conditions granted to your company as Additional Insured.
BTL Entertainment’s insurance company/broker would issue the Certificate of Insurance, on which your company would be listed as “Additional Insured”. BTL Entertainment would provide you with the certificate. It would act as proof of insurance, proving to you that BTL Entertainment has insurance coverage for their event and that you have been added as Additional Insured for any damages, losses, or claims that may arise from this event. Ensure to forward a copy of the certificate to your insurance company/broker for review.
The responsibility then lies on BTL Entertainment, not your company, as it is not your event. You are merely offering a service/venue to BTL Entertainment.
“What if I’m asked for a Certificate of Insurance? What then?”
Let’s say you’re hosting a wedding at another venue that is not owned by you. The wedding venue asks you for a Certificate of Insurance to prove that you have insurance to cover the event.
You would work through the same steps that BTL Entertainment did, first going to your insurance company/broker asking to extend your liability to cover the additional exposure and adding the wedding venue as an Additional Insured on your insurance policy for the duration of the wedding. Once complete, your insurance company/broker would issue the Certificate of Insurance. Keep a copy and provide one to the wedding venue as proof of insurance for the big day.
“Where can I learn more?”
To request a Certificate of Insurance, you can quickly request one on-line by completing our Certificate of Insurance Request Form, or by contacting your Gougeon Broker at 1.800.461.1106 or firstname.lastname@example.org.
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