Certificate of insurance

How a certificate of insurance works

A certificate of insurance is issued by your insurance agent, broker or insurer, not by you. It summarizes policies that already exist: who is insured, which companies provide the coverage, the policy numbers, the effective and expiration dates, and the limits. For liability coverage, the common form is the ACORD 25.

The certificate holder is the person or company that asked for proof, such as a client, a general contractor or a property manager. Being the certificate holder gives them a copy of the summary. It doesn’t give them any rights under your policy.

That’s the key point about a COI: it’s evidence of coverage, and it doesn’t change the policy. The form itself says it’s issued for information only and doesn’t amend, extend or alter the coverage. If a contract requires a client to be an additional insured, the policy needs an additional insured endorsement that adds them. The same goes for a waiver of subrogation or primary and noncontributory wording. A box checked on the certificate reports those endorsements; it doesn’t create them.

Most certificates also have a description section, where the agent can note the project, the location or the endorsements that apply. Wording added there carries no more weight than the rest of the certificate, so ask for copies of the endorsements themselves when the contract depends on them.

A certificate is accurate on the day it’s issued. Policies renew, lapse and get canceled afterward, and the certificate won’t update itself. Many contracts ask for a new certificate at each renewal for that reason.

Coverages a certificate of insurance usually shows

A liability certificate lists each policy on its own row, with its limits and dates. Check each one against what the contract requires.

Property coverage, such as builder’s risk, is usually shown on a different certificate form. If a contract asks for proof of property insurance, ask your agent which form applies.

Workers’ comp is the line most often missing. A sole owner with no employees may not be required to carry it in some states, and some states issue an exemption certificate instead. Whether a general contractor will accept that, and how its own insurer treats the sub at audit, are separate questions. Check your state’s workers’ compensation agency and your own policy.

Why certificates of insurance matter to each party

For contractors and subcontractors

Without a current certificate, you often can’t start work, and some general contractors won’t release payment until one is on file. Keeping your agent’s contact handy and asking for certificates as soon as you sign a job avoids delays on the first day.

For general contractors hiring subs

If an uninsured sub injures someone or damages property, the claim may land on your policy. At your workers’ comp audit, what you paid a sub without proof of coverage may be counted as your own payroll. Collecting and checking certificates is cheap protection against both.

For homeowners and property managers

A certificate tells you the contractor had coverage when it was issued. Call the agent listed on it to confirm the policy is active, and ask to be added as an additional insured if the job is large or risky. Check that the business name on the certificate matches the name on the contract and the contractor’s license, since a policy covers the business it was written for.

How to request and check a certificate of insurance

1. Read the contract’s insurance section for required coverages, limits, endorsements and who must be named.
2. Send that section to your agent with the certificate holder’s exact legal name and address.
3. Ask the agent to add any required endorsements to the policy before issuing the certificate.
4. When you receive a sub’s certificate, compare each limit and coverage against your subcontract’s requirements.
5. Check that the policy dates cover the whole job, not just the start.
6. Ask for copies of the additional insured and waiver of subrogation endorsements, not just checked boxes.
7. Confirm the coverage by calling the issuing agent, using contact details you look up yourself.
8. Track expiration dates and request renewals before they lapse.

A simple spreadsheet of every sub, each policy and its expiration date turns this into a monthly five-minute check instead of a scramble when a claim arrives.

Checking a certificate of insurance against a contract

Say a general contractor’s subcontract requires the following of a framing sub. The limits here are for illustration only; actual requirements come from your own contract. The job runs from April through August, and the sub sends in a certificate in March.

Two lines pass and three need follow-up. The auto limit falls $1,000,000 − $500,000 = $500,000 short, so the sub needs a higher limit or an umbrella policy that sits over the auto. The workers’ comp policy expires before the job ends, so the general contractor sets a reminder to get the renewal certificate before June 30. And the checked additional insured box isn’t enough on its own; the general contractor asks for a copy of the endorsement.

The general contractor holds the sub’s first payment until the gaps are fixed, as its subcontract allows. A week of follow-up now is easier than finding the gaps after a claim.

Common certificate of insurance mistakes

• Accepting a certificate as proof of additional insured status without the endorsement.
• Filing a certificate without comparing its limits to the contract.
• Collecting a certificate once and never checking that the policy renewed.
• Accepting a certificate emailed by the sub without confirming it with the issuing agent.
• Listing the wrong legal name for the certificate holder or additional insured.
• Letting subs start work before their certificates arrive.

A certificate is only as good as the policy behind it. Treat it as a summary to verify, not a guarantee.