Running a contracting business in Central New York means juggling multiple priorities. You focus on delivering quality work, managing crews, and growing your customer base. But when a potential client requests a certificate of insurance before you can even start the project, the paperwork can feel overwhelming.
Many contractors worry about whether they have the coverage their clients require or how to navigate these requests without delays. You want to land the job and get to work, not spend hours trying to understand insurance documentation.
At the Horan insurance agency, we assist Central New York business owners with certificate of insurance requests and can help clarify coverage requirements. We work with multiple carriers and understand the documentation process that keeps your business moving forward.
This article covers the purpose of certificates of insurance, the steps to obtain one, and how to address unexpected coverage requirements that might arise.
Understanding Certificate of Insurance Requests and Their Purpose
Whether you’re a floor installation contractor or a professional consultant, you’ve probably been asked to provide proof of liability insurance prior to beginning a job. This proof comes in the form of a Certificate of Insurance (also called a Certificate of Liability Insurance or ACORD 25 COI).
You might have received an example of a generic COI from your customer.
Clients ask for a certificate of insurance to help address potential risks from various accidents or negligence resulting from the work you will be doing for them.
The COI shows that you have coverage to help address any damages or injuries that may occur. This is important for both you and your client, as it can help reduce financial exposure in the event of an accident.
A COI is a summary of your insurance policy that includes core details, such as the type of insurance, the policy number, and the liability limits. It is a secure and convenient way to share your insurance information with a client.
This is a basic request that any well-run organization would ask of a small business owner with whom they’ve entered into an agreement.
How Do I Obtain a Certificate of Insurance?
Many times insurance-related issues can feel overwhelming. Thankfully, obtaining proof of coverage via a COI is fairly easy.
Simply contact your insurance agent or carrier and let them know about the COI request you received.
At no cost to you, the agent will add primary info to the COI as follows:
- Your business name
- The beginning and ending dates on the policy (effective dates)
- Name of the insurance carrier
- Name of the insurance agency
- Policy type(s), i.e., general liability, workers comp, commercial auto
- The amount of coverage you have for each policy type
Why Does My Customer Want to Be a Certificate Holder?
There are times when you may be asked to make your customer a “certificate holder.”
While also not complicated, meeting this request is not as simple as merely placing the certificate in your customer’s hand to “hold.”
When you first begin an insurance policy you will receive a certificate of insurance. It shows all the basic information mentioned in the previous section.
However, it does not prove that the policy is in force at that moment. It only proves that it was active at some point.
To designate your client as a Certificate Holder, your agent or carrier will add your client’s name and address to the certificate. That would not be possible on a policy not in good standing.
So, this is one way your customer can verify that your insurance is current. This is also why you can’t show them your insurance policy instead of your certificate to satisfy a COI request.
How Do I Handle COI Requests for Insurance I Don’t Have?
Sometimes you might be asked to show proof of insurance for a policy you don’t currently have or perhaps don’t need.
This is a tricky one, and it’s something we see often.
The scenario usually goes something like this:
- You and your customer agree to the terms of the project.
- You receive a request to provide proof of insurance.
- On that request, there are between three to five required policies for which you need to provide proof of being in force (or currently active).
- The problem is you only have one or two of those required policies at most.
Does that mean you have to buy more insurance? Not always.
Certificate requests are often broad, and the same sample is sent to anyone with whom your client wishes to enter into an agreement.
The request may also have been sent by someone other than the person you dealt with directly, so your line of business and the type of insurance your business requires were likely not considered for the COI request.
In such cases, you can sometimes bypass the request for insurance you don’t have or don’t need by briefly conversing with your customer or client. They might say it’s okay that you don’t have a professional liability and commercial umbrella policy and allow you to obtain a certificate without those policies listed.
But be advised that there are times when some of your clients will not budge and insist that all listed policies be in force before work can be done. That is why it is critical that you find out what their insurance requirements are before you come to terms with them.
Additional policies will add costs and may not be readily available to you depending on your profession.
If the job is lucrative enough you might decide to purchase those policies. We can assist you in exploring the options and help you work toward a timely solution once you contact us.
Working with Licensed Agents for Certificate Requests
It's essential to have a relationship with a licensed insurance agent that can quickly respond to certificate requests and review them for anything that could create challenges for you or your business.
Our licensed agents can help ensure you have an accurate certificate so you can conveniently provide it to your customer or client to help you land the job you were hired to do.
Avoid agencies that take days or even weeks to get you a certificate. That can cost you time and money and even jeopardize your relationship with the customer. Challenges with your business reputation could affect future opportunities.
We understand that insurance can create stress and confusion, and COI requests can be no different. We aim to help reduce both stress and confusion for you, as we have for many other business owners in your shoes.
We can assist you in exploring coverage options for your upcoming project. Simply click the Get a Quote button below to get started.
If you want to learn about commercial insurance requirements, read “Why Must CNY Contractors Have Workers Comp Insurance?”
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