A certificate of insurance is a document issued by an insurance company/broker that is used to verify the
existence of insurance coverage under specific conditions granted to listed
individuals. More specifically, the document lists the effective date of
the policy, the type of insurance coverage purchased, and the types and dollar
amount of applicable liability (Definition from Investopedia).
If you
are being contracted to perform a job (i.e. construction, plumbing, etc.) you
may be asked to provide a certificate of insurance. This will prove to your
client that you are covered in the event of an incident or claim. Depending on the type of
job you are providing, the client will ask for proof of various policies. The
two most common policies that are required are General Liability Insurance and
Workers’ Compensation Insurance. Proof of General Liability will show that you
are insured in case any damages arise from the work you provided to the client.
The client is interested in Workers’ Compensation insurance in case any of your
employees are hurt on the job on their property.
In addition to a certificate of insurance, you may also be
asked for various endorsements including Additional Insured (AI), Waiver of
Subrogation, Loss Payee, just to name a few. Additional Insured endorsements
are the most common; a client may ask to be “named as additional insured”. This
means that the company you are working for will be covered in the event of a
claim occurring from your work. Insurance carriers can either provide a Blanket
Additional Insured endorsement, which covers any client noted on a certificate
of insurance, or a Specific Additional Insured endorsement, which will name the
specific company on the endorsement itself.
