What is a Certificate of Insurance?

Malcolm Tatum
Malcolm Tatum

A certificate of insurance is a document that is issued by an insurance provider as a means of confirming the existence of a specific type of coverage that is held by an individual or business entity. The detail found in the document varies, depending on the practices of the insurer and any governmental regulations that may apply to the location of the insured party. This type of insurance confirmation is often required when a business transaction carries a significant amount of risk and the possibility of loss and liability is considered high.

A taxi company that hires drivers through a temp agency may insist on a certificate of insurance.
A taxi company that hires drivers through a temp agency may insist on a certificate of insurance.

While the types of information provided on a certificate of insurance vary from one country to another, there are a few basic types of data that are typically included. The legal name of the insured party is found on the document, along with the date that the insurance coverage was established. The nature of the insurance coverage is also documented in the certificate, along with the scope of that coverage. This makes it possible to determine not only the existence of the coverage, but also the total amount of coverage that is provided under the current policy. Since a certificate of insurance is often required for participation in business deals involving a significant amount of risk, knowing how much coverage is present is just as important as knowing the coverage exists.

A certificate of insurance for automobile coverage typically comes as a small card, making it easy to keep in the glove box.
A certificate of insurance for automobile coverage typically comes as a small card, making it easy to keep in the glove box.

Various provisions contained within the terms of the insurance coverage are also included in the detail found on a certificate of insurance. The extent of liability coverage is often found in the text of the document, along with information regarding any types of exclusion that may apply to that coverage. Data about premiums is often included, as well as the schedule for paying those premiums. This is important, since the detail provides important data regarding when the next premium payment is due, and what must be paid to maintain the coverage.

A certificate of insurance typically specifies any restrictions on vehicle coverage.
A certificate of insurance typically specifies any restrictions on vehicle coverage.

Use of a certificate of insurance is common in many situations. Employers working with temporary agencies may require that proof of insurance coverage related to the employment of temporary help be provided before the assignment begins. For example, a taxi company that hires drivers through a temp agency may insist on proof of insurance that protects the interests of both the driver and the cab company before assigning the driver a route. In like manner, consultants who are granted privilege to proprietary information may also be required to present proof of liability insurance before receiving access to that data.

Most states require drivers to carry at least a minimum amount of liability coverage.
Most states require drivers to carry at least a minimum amount of liability coverage.
Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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