If you own a business in Utah, you’ve likely encountered requests for a “certificate of insurance” or COI. Whether you’re bidding on a contract, signing a lease, or working with a new client, certificates of insurance are a routine part of business operations. Yet many business owners don’t fully understand what they are, why they’re important, or how to obtain them.
Understanding certificates of insurance helps you respond quickly to requests, ensure compliance with contractual obligations, and avoid business disruptions. Let’s demystify this important business insurance document.
What Is a Certificate of Insurance?
A certificate of insurance (COI) is a one-page document that summarizes your business insurance coverage. Think of it as proof of insurance—similar to the insurance card you carry for your personal auto insurance, but for your business policies.
A COI typically includes:
- Your business name and contact information
- Your insurance company’s name and policy numbers
- Types of coverage you have (general liability, professional liability, workers’ compensation, etc.)
- Coverage limits for each policy
- Policy effective and expiration dates
- Description of operations or locations covered
- Certificate holder information (the party requesting the certificate)
- Additional insured status, if applicable
Important: A certificate of insurance is not an insurance policy. It’s simply evidence that policies exist. The actual insurance policy contains all the terms, conditions, exclusions, and detailed coverage information.
Why Do Businesses Request Certificates of Insurance?
Organizations request COIs to verify you have adequate insurance before doing business with you. This protects them from potential liability and financial loss. Common scenarios include:
Commercial Leases: Nearly every commercial landlord requires a COI before you move into office, retail, or warehouse space. They want assurance that if your business causes property damage or someone is injured on the premises, your insurance will cover it.
Client Contracts: Many clients, especially larger companies and government entities, require contractors and vendors to provide COIs before awarding contracts. They want proof that you’re properly insured and won’t become their financial liability if something goes wrong.
Venue Requirements: If you’re hosting an event, participating in a trade show, or conducting business at someone else’s facility, the venue typically requires a COI.
Subcontractor Agreements: General contractors require COIs from subcontractors to ensure all parties are properly insured on a job site.
Professional Licenses: Some professional licensing boards require proof of insurance, particularly professional liability coverage.
Bank or Lender Requirements: When applying for business loans or lines of credit, lenders often request COIs to verify you’re protecting your business assets.
Understanding the Standard ACORD Certificate Format
Most certificates of insurance use the standardized ACORD (Association for Cooperative Operations Research and Development) forms—typically the ACORD 25 for general business insurance or ACORD 27 for auto insurance.
The standardized format ensures consistency and makes it easier for everyone to read and understand the certificate. Key sections include:
Producer Information: Your insurance agent or broker’s contact information. This is whom the certificate holder should contact with questions.
Insurers: Lists each insurance company providing coverage, with their identifying letter code (A, B, C, etc.).
Insured: Your business name and address exactly as it appears on your policies.
Certificate Holder: The entity requesting the certificate (your landlord, client, venue, etc.). This is “for information only” and doesn’t grant them any rights under your policy unless specifically stated.
Coverage Sections: Organized by coverage type (general liability, auto liability, umbrella, workers’ comp, etc.) with policy numbers, effective dates, and limits shown.
Description of Operations: A box where special provisions, additional insured status, waivers of subrogation, or notice requirements can be noted.
Key Coverage Information Shown on a COI
Understanding what the numbers and terms on a COI mean helps you verify accuracy:
General Liability Limits: Typically shown as:
- Each Occurrence limit (e.g., $1,000,000) – maximum paid for one incident
- General Aggregate limit (e.g., $2,000,000) – maximum paid for all claims during the policy period
- Products-Completed Operations Aggregate (for businesses that make or install products)
- Personal and Advertising Injury limit
Auto Liability: If you have business vehicles:
- Combined Single Limit, or separate limits for bodily injury and property damage
- Whether coverage is for Any Auto, Scheduled Autos, or Hired/Non-Owned Autos
Umbrella/Excess Liability: Additional coverage above your base policies
Workers’ Compensation: Required if you have employees, showing statutory limits and employer’s liability limits
Professional Liability: If applicable to your profession, showing per-claim and aggregate limits
Common Certificate Requirements You’ll Encounter
Different certificate holders have different requirements. Common requests include:
Specific Coverage Limits: Many require minimum coverage amounts, such as $1 million per occurrence for general liability. If your coverage is lower, you may need to increase it to comply with the contract.
Additional Insured Status: This is one of the most common and important requirements. When someone is named as an additional insured on your policy, they receive certain protections under your insurance. For example:
- A landlord named as additional insured is covered if they’re sued for something your business did
- A client added as additional insured gains protection for their vicarious liability related to your work
Adding someone as additional insured typically requires an endorsement to your policy, though some policies include blanket additional insured provisions.
Primary and Non-Contributory Language: Some contracts require that your insurance pays first before the certificate holder’s insurance, even if they have coverage that might apply.
Waiver of Subrogation: This prevents your insurance company from suing the certificate holder to recover money paid on a claim. For example, if a fire in your leased space is caused by the landlord’s negligence but your insurance pays for your lost inventory, a waiver of subrogation prevents your insurer from suing the landlord to recover those costs.
Notice of Cancellation: Many require that the certificate holder be notified 30 days before your policy is cancelled or non-renewed. Note: Insurers are not always obligated to provide this notice, so you should monitor your own policy renewals carefully.
Proof of Specific Coverage Types: Such as cyber liability, pollution liability, or professional liability depending on your business operations.
How to Obtain a Certificate of Insurance
Getting a COI is typically straightforward:
- Contact Your Insurance Agent: Provide them with:
- The certificate holder’s name and mailing address
- Any specific requirements from your contract or lease
- Any additional insured, waiver, or special language needed
- The date you need the certificate
- Review the Certificate: Before sending it to the requesting party, carefully review it for accuracy:
- Is your business name spelled correctly?
- Are policy numbers accurate?
- Do coverage amounts match your policies?
- Is the certificate holder information correct?
- Does it include all requested provisions?
- Distribute the Certificate: Send it to the requesting party. Keep a copy for your records, noting whom you sent it to and when.
Timeline: Most agents can issue certificates within 24-48 hours, though adding endorsements like additional insured status may take longer. Plan ahead—don’t wait until the last minute before a contract signing or lease commencement.
Cost: Certificates of insurance are typically provided free by your insurance agent. However, if you need endorsements added to your policy (like additional insured status), there may be a small fee ($25-100) depending on your insurer.
Common Certificate of Insurance Mistakes to Avoid
Mistake 1: Sending a Certificate Without Proper Endorsements
If the contract requires you to add someone as additional insured but your COI just says “Additional Insured: XYZ Company” without an actual policy endorsement, the certificate is inaccurate. The certificate holder is not actually protected, which could result in contract breach.
Solution: Ensure your agent adds the necessary endorsements to your policy before issuing the certificate.
Mistake 2: Not Reading Contract Insurance Requirements Carefully
Don’t assume standard coverage meets contract requirements. Contracts may require:
- Higher limits than you carry
- Specific types of coverage you don’t have
- Special provisions that need policy endorsements
Solution: Read insurance requirements in contracts carefully and discuss them with your agent well before signing.
Mistake 3: Letting Coverage Lapse
If your policy expires or is cancelled and you’ve provided a COI to clients or landlords, you could be in breach of contract and potentially operating without crucial insurance protection.
Solution: Monitor policy expiration dates and renew coverage promptly. If your policy terms change, provide updated certificates to anyone who has your COI on file.
Mistake 4: Assuming the COI Grants Coverage
Remember: the certificate isn’t the policy. It’s just proof that policies exist. The actual policy language determines what’s covered.
Solution: Understand your actual policy terms, not just what’s listed on certificates.
Mistake 5: Having Your Agent Add Inaccurate Information
Never ask your agent to show coverage you don’t actually have or limits higher than your actual policies. This misrepresentation could:
- Void your coverage
- Expose you to personal liability
- Result in fraud charges
- Cause your agent to lose their license
Solution: Always ensure certificates accurately reflect your actual coverage.
Managing Multiple Certificate Requests
If your business regularly needs to provide certificates, implement a system:
Create a Certificate Log: Track whom you’ve provided certificates to, when, and what specific requirements were included.
Set Renewal Reminders: Know when your policies renew and proactively update certificates for active contracts and clients.
Use Technology: Some insurance companies and agents offer online portals where you can request and download certificates 24/7.
Maintain a Template: Keep a running list of parties who regularly need certificates and their specific requirements.
Special Situations
Working With Multiple Subcontractors: If you’re a general contractor, you’ll need to collect and verify COIs from all subcontractors. Ensure:
- Coverage is adequate for the work being performed
- Your company is named as additional insured
- Coverage is active for the duration of the project
- Workers’ compensation coverage is in place
Short-Term or Event-Based Needs: If you need insurance just for a specific event or short period, discuss short-term policy options with your agent rather than purchasing annual coverage.
International Work: If your business operates internationally, standard U.S. policies may not provide adequate coverage. Discuss international insurance needs with your agent.
What If You Don’t Meet Certificate Requirements?
If a contract requires insurance coverage you don’t currently have:
Option 1: Purchase the Required Coverage: This is often the most straightforward solution. Discuss with your agent what adding the coverage would cost.
Option 2: Negotiate Contract Terms: Sometimes insurance requirements in contracts are boilerplate language that can be negotiated, especially for smaller contracts or if the requirements are excessive for the work being performed.
Option 3: Decline the Contract: If insurance requirements are unreasonably high or would cost more than the contract is worth, it may not be a good business opportunity.
The Bottom Line on Certificates of Insurance
Certificates of insurance are a routine part of business operations, but they represent important legal and financial protections. Understanding what they are, what they show, and how to obtain them helps you:
- Respond quickly to client and landlord requests
- Ensure compliance with contractual obligations
- Avoid business disruptions from delayed certificates
- Protect your business with appropriate coverage
While certificates themselves are simple documents, the underlying insurance coverage they represent is crucial to your business’s financial protection and professional reputation.
Need Help With Business Insurance or Certificates?
Whether you need a certificate of insurance for an upcoming contract, want to review whether your current coverage meets typical requirements, or are starting a new business and need guidance on appropriate coverage, we’re here to help.
We work with Utah businesses of all sizes to find the right insurance protection at competitive rates. We understand common certificate requirements and can ensure you have the coverage you need to meet contractual obligations while protecting your business.
Contact us today for a free consultation about your business insurance needs. We’ll review any contract requirements you’re facing, ensure your coverage is adequate, and provide certificates quickly when you need them.