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What is a Certificate of Insurance?

Imagine this: Your business just landed a new client and you are eager to get to work. But before you can start, the client asks for a certificate of insurance.Why would a client ask you about your insurance coverage before allowing you to start work? Documents can be lost. People can get hurt. No matter how careful you or your employees are… accidents can happen. (And some are costlier than others.)

Here’s the good news: Business insurance from Erie Insurance is designed to protect the business that means so much to you. Here are some common questions we hear about certificates of insurance.

What is a certificate of insurance?

A certificate of insurance (COI) is an official document issued by your insurance agent or insurance company proving your insurance coverage is in effect. It shows the dates of coverage, the maximum amount the insurance company will pay for a covered loss (also known as a coverage limit) and the type of losses that are covered. A certificate of insurance is not an insurance policy and does not provide coverage. It is simply proof that coverage exists on the day that the certificate was issued.

How will COIs help my business?

Just like you wouldn’t hire a contractor who can’t prove he or she is insured for damage or accidents, some clients will require you to present proof of insurance before they’ll do business with you. Having the ability to provide a COI could help you land business faster.

What’s the difference between a COI and an “additional insured”?

A COI is a document that serves as proof that insurance coverage exists on the day the certificate was issued. An “additional insured” is another person or business that may be specifically listed and can be protected through your insurance policy – usually the liability portion.

A certificate of insurance is usually requested by one party in an agreement, contract or transaction to make sure another party has the appropriate insurance coverage. The certificate shows that a policy is in force—but that doesn’t mean the person or business requesting it is covered as well. A certificate of insurance does not entitle the certificate holder to any rights under the contract. 

While an additional insured may be listed on the insurance policy – it’s important to know that the additional insured doesn’t have exactly the same coverage as the named insured. There are many types of additional insured endorsements, so what’s covered – and what’s not – is all subject to the terms and conditions of each individual policy.

Still have questions? An insurance professional like an Erie Insurance agent can help explain the difference and walk you through your options based on what your business needs.

Why would I want to name an additional insured on my business insurance policy?

Think of it this way: Building a business is all about forming relationships and partnerships. Most of the time, that’s a good thing. But sometimes, it can also put your business at risk for lawsuits.

Here’s an example: Imagine that a wholesaler-distributor partners with a toy manufacturer to help them distribute the year’s hottest new kids’ toy: an all-in-one pogo stick/skateboard/drone. (Don’t worry, parents… it’s only an example.)

But, picture this: After a few months of selling and distributing the toys, a defect is discovered. The toys are breaking, and kids are getting hurt. A parent decides to sue the wholesaler-distributor and the manufacturer for bodily injury. By being named an additional insured on the manufacturer’s policy, the wholesaler-distributer may obtain coverage under the manufacturer’s policy (within the stated limits, and subject to the terms and conditions of the policy) to help pay for damages and legal fees.

How can I add an additional insured?

To add an additional insured to your policy, contact your ERIE agent. Some businesses typically request to be named as an additional insured on a policy once they start working with you. There are two ways this is usually treated: on a specific basis and on a blanket basis. 

A specific basis is just that — a specific person or business is named as an additional insured on a policy. A blanket basis covers anyone who meets the definition of “additional insured” per the terms of the policy. This usually includes groups like contractors or landlords. Many contracts spell out who should be named as an additional insured on a business’s policy.

Like we mentioned above: Remember that the coverage extended to the additional insured is subject to the terms and conditions of the policy. Generally speaking, the additional insured isn’t covered in the same manner as the primary person or business named on the business policy.

Where can I go with questions about business insurance?

Business insurance can be complicated, and not having the right information (or the right coverage) can put you and your business at financial risk. You can trust Erie Insurance and our network of local, independent agents to help you feel confident about coverage for what you’ve worked so hard to build.

Find a local ERIE agent to request a business insurance quote, obtain a certificate of insurance or to learn more. 

This story was originally published on March 22, 2017. It has been updated with new information.

ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.