What is a Certificate of Insurance (COI)?

What Is a Certificate of Insurance (COI), and Why Do I Need One?

We get this question all the time at Hanby Insurance. The phone rings, and a contractor on the other end says, “My client says I can’t start the job until they get a COI. How quickly can I get one?”

After a hailstorm, we hear the other side of the conversation from homeowners: “A roofer wants to start working on my house next week. Should I be asking for proof of insurance?”

Both questions involve the same document: a Certificate of Insurance (COI).

Whether you’re a contractor starting a new project, a small business leasing office space, or a homeowner hiring someone to work on your property, understanding Certificates of Insurance can help protect you from unexpected risks.

Let’s break down what a COI is, why it matters, and what to look for before work begins.

What Is a Certificate of Insurance (COI)?

A Certificate of Insurance, commonly called a COI, is a document that provides a summary of a business’s insurance coverage.

Think of it as proof that a business carries certain types of insurance. Instead of sending an entire insurance policy, which can be dozens or even hundreds of pages long, a COI summarizes the key information in an easy-to-read format.

Most businesses use a standardized form called the ACORD 25.

A typical COI includes:

  • Business Name: The name of the insured business or individual.
  • Insurance Carrier: The insurance company providing coverage.
  • Types of Coverage: Such as General Liability, Commercial Auto, Workers’ Compensation, or Umbrella Liability.
  • Policy Numbers: Identification numbers for the insurance policies.
  • Coverage Limits: The maximum amounts listed for certain types of coverage.
  • Policy Dates: When the policies begin and expire.
  • Certificate Holder: The person or business requesting proof of insurance.

If you’ve ever looked at the declarations page on your personal insurance policy, a COI serves a similar purpose by providing a snapshot of insurance information.

Here’s the important part: A Certificate of Insurance is not an insurance policy. It does not create, extend, or change coverage, and it doesn’t guarantee that a particular claim will be covered.

What Types of Insurance Are Listed on a COI?

A Certificate of Insurance may show several different types of business insurance, depending on the policies the business carries.

General Liability Insurance

General Liability Insurance is one of the most commonly requested coverages. It can help protect businesses against certain claims involving bodily injury or property damage to others.

For example, if a contractor accidentally damages a customer’s property while performing covered work, General Liability Insurance may help pay for the damage.

You’ll often see limits of $1 million per occurrence and $2 million aggregate, although limits vary by policy.

Commercial Auto Insurance

Commercial Auto Insurance provides coverage for vehicles used in business operations.

If a contractor’s work truck backs into a customer’s garage door, Commercial Auto Liability Insurance may respond to the resulting property damage.

Workers’ Compensation Insurance

Workers’ Compensation Insurance generally provides benefits for employees who experience work-related injuries or illnesses.

Texas is unique because most private employers are not required to carry Workers’ Compensation Insurance. However, many general contractors, commercial property owners, and businesses require contractors to carry it before beginning work.

Commercial Umbrella Insurance

A Commercial Umbrella Policy can provide additional liability limits above certain underlying policies, subject to its terms and conditions.

For businesses working on larger projects, clients may require higher liability limits than a standard General Liability policy provides.

Why Would Someone Ask for a Certificate of Insurance?

The short answer? They want to know you’re insured before doing business with you.

Imagine you’re a general contractor hiring an electrician to work on a construction project. If that electrician accidentally causes property damage or someone gets injured because of their work, you want to know they have insurance that may respond.

That’s where a COI comes in.

Here are some common situations where Certificates of Insurance are requested:

  • Contractors and Subcontractors: General contractors frequently require subcontractors to provide proof of General Liability and Workers’ Compensation Insurance before allowing them onto a job site.
  • Commercial Landlords: If you’re leasing an office, retail space, or warehouse, your landlord may require proof of liability insurance.
  • Event Venues: Participating in a festival, farmers market, trade show, or community event? Organizers often require vendors to provide proof of insurance. Some events may require Special Event Insurance.
  • Homeowners Associations: HOAs may require contractors to provide insurance certificates before working on common areas.
  • Cities and Municipalities: Contractors may need to provide proof of insurance when registering with a city or obtaining certain permits.
  • Business Contracts: Companies frequently require vendors, consultants, and service providers to demonstrate that they carry adequate insurance.

In many situations, no COI means no job. Even when your business has the proper insurance, failing to provide documentation can delay a project or prevent you from securing a contract.

Certificate Holder vs. Additional Insured: What’s the Difference?

This is one of the most misunderstood parts of a Certificate of Insurance.

Although these terms sound similar, they mean very different things.

Certificate Holder

A certificate holder is simply the person or organization receiving proof of insurance.

For example, if you’re a contractor working for a property management company, that company may ask to be listed as the certificate holder.

Being listed as a certificate holder does not automatically provide coverage under your insurance policy.

Additional Insured

An additional insured is a person or organization granted certain coverage rights under someone else’s insurance policy, usually through an endorsement or qualifying policy provision.

For example, a general contractor may require a subcontractor to name the general contractor as an additional insured on the subcontractor’s General Liability policy.

This may provide the general contractor with certain liability protection related to the subcontractor’s work, depending on the policy language.

Important: Simply listing someone on a Certificate of Insurance does not make them an additional insured. The actual insurance policy must provide that coverage.

Some contracts also require additional provisions, such as a Waiver of Subrogation or Primary and Noncontributory wording. These requirements may need special endorsements and could involve additional premium.

If a contract requires additional insured status or special insurance wording, it’s always best to have your insurance agent review those requirements before signing.

Homeowners: Why You Should Ask for a COI Before Hiring a Contractor

Here in North Texas, we know what happens after a hailstorm. Within days, roofing contractors are knocking on doors offering inspections and repairs.

Before allowing someone to begin work on your home, it’s a good idea to ask for proof of insurance.

A Certificate of Insurance can help you verify that the contractor carries liability insurance and identify the coverage limits and policy dates.

Here are a few things to look for:

  • General Liability Coverage: Does the contractor carry liability insurance that may respond if they damage your property?
  • Policy Dates: Are the policies currently in effect?
  • Coverage Limits: Are the limits appropriate for the type of work being performed?
  • Workers’ Compensation: If the contractor has employees working on your property, ask whether they carry Workers’ Compensation Insurance.

Whenever possible, request that the COI be sent directly from the contractor’s insurance agent rather than relying solely on a copy provided by the contractor.

Keep in mind that a COI is only a summary. It doesn’t guarantee that every type of work the contractor performs is covered.

And if you’re dealing with storm damage, be sure to read our other helpful articles:

Remember, a contractor offering to waive or absorb your homeowners insurance deductible may be violating Texas law. It’s important to understand your responsibilities before signing a roofing contract.

What Happens if a Contractor Doesn’t Have Insurance?

Hiring an uninsured contractor can create significant financial risks for both the contractor and the person hiring them.

For contractors, operating without appropriate insurance can mean losing jobs, violating contractual requirements, and potentially being responsible for expensive claims.

Imagine accidentally causing a fire while working on a customer’s home. Without appropriate liability coverage, the financial consequences could be devastating.

For homeowners, hiring an uninsured contractor can also create complications.

If a contractor damages your home or someone gets injured on your property, you could face unexpected expenses, an insurance claim under your own Homeowners Insurance, or even a lawsuit, depending on the circumstances.

Requesting a COI is a simple step that can help you make a more informed decision before hiring someone.

Does a Certificate of Insurance Cost Money?

Here’s some good news!

In most cases, obtaining a standard Certificate of Insurance from your insurance agency doesn’t cost anything.

At Hanby Insurance, we don’t charge our clients for issuing standard Certificates of Insurance.

However, if a contract requires additional coverage, higher liability limits, or special endorsements, your insurance carrier may charge additional premium.

That’s why we encourage our commercial clients to send us their insurance requirements before signing a contract. We can help review what is being requested and determine whether their current policies meet those requirements.

How Do I Get a Certificate of Insurance?

Getting a Certificate of Insurance is usually pretty simple!

If you’re a Hanby Insurance client, just call, text, or email our office and let us know what you need.

We’ll typically ask for:

  1. The name of the person or business requesting the certificate.
  2. The certificate holder’s mailing address.
  3. Any specific insurance requirements provided in the contract.
  4. Whether additional insured status or other endorsements are required.
  5. Where the completed certificate should be sent.

In many cases, we can issue a standard Certificate of Insurance the same business day.

If your contract has special insurance requirements, additional time may be needed to review your coverage or obtain approval from the insurance carrier.

Let Hanby Insurance Help!

At Hanby Insurance, we understand that running a business comes with enough paperwork. Getting proof of insurance shouldn’t be complicated.

Whether you’re a contractor needing a COI for your next project, a business owner reviewing insurance requirements in a lease, or a homeowner wanting to verify a contractor’s coverage, our team is happy to help.

As an independent insurance agency serving Rockwall and businesses throughout Texas, we work with more than 100 insurance carriers to help our clients find coverage that fits their needs.

Not sure your current insurance meets your contract requirements? We can help with a Commercial Insurance Policy Review.

Need a Certificate of Insurance or a business insurance quote?

Call or text Hanby Insurance at 972-285-0381, email [email protected], or visit our Contractors Insurance page to request a quote.

We’ve been helping protect North Texas businesses and families since 1940, and we’d love the opportunity to help you, too!

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