A certificate of insurance is a document used to provide information on specific insurance coverage. The certificate provides “proof” of the insurance and usually contains information on types and limits of coverage, insurance company, policy number, named insured, and the policies’ effective periods.
A certificate of insurance is often demanded in situations where liability and large losses are a concern. For example, a company wishes to hire a driver from a temp agency. The company will most likely ask the agency to show them a certificate of insurance that proves that certain liabilities will be covered by insurance in the event the driver causes problems, such as incurring damages from driving the company’s vehicles.
Policyholders may request a certificate of insurance for many reasons. Some of the more common are:
- They are a tenant, and a building owner is requesting information about the existence of liability insurance coverage
- They are the mortgagor of a building, and are requesting information about the existence of property insurance coverage upon closing or renewal
- They leased equipment and the owner of equipment wants information about the existence of property insurance coverage while equipment is in possession of the client
- They need evidence of workers compensation insurance in order to obtain a contract
Such requirements are particularly common in construction contracts with large contractors, government entities, and major corporations. For contracting purposes, insureds are required to name or schedule specified persons or organizations onto their insurance policies. Such requests are accommodated by adding endorsements to the insurance policies. Collecting actual copies of the required insurance endorsements along with the certificate of insurance is essential, as certificates generally do not alter, extend or afford coverage to any party other than the named insured(s).
Certificates are simply snapshots of basic policy coverages and limits at the time of issuance of the certificate. Certificates cannot modify coverages or change the terms of the insurance contract.