In general, a certificate of insurance is an official document that an insurance broker or company issues for verifying that an individual or organization really has ample insurance coverage. To be more specific, the document typically contains the insurance policy’s effective date; the particular type of purchased insurance coverage, as well as the cost and types of liability considered applicable. Usually, businesses or organizations require certificates of insurance from their contractors or vendors in cases where there’s a high potential for huge losses and liability.
Examples of Certificates of Insurance
Contractors, small business owners, and organizations typically have certificates of insurance for protection against workplace injury or accident liabilities. They are typically issued when buying liability insurance coverage and lists down the coverage limits and types, the company issuing the insurance policy and certificates, the insured’s name, efficacy dates, and policy number.
Certificates of insurance are normally also required for contractors, businesses, or organizations in order to win over contracts. Since a lot of individuals and companies hire contractors, a potential client needs proof that a contractor or business has substantial liability insurance to make certain that the potential client won’t be held responsible for inferior work, injuries, or damages.
Tracking and Validating Certificates of Insurance
In general, a client asks issuing insurance companies directly for certificates instead of the contractor or business. The client must then verify that all the details such as names and dates contained in the certificate are true and accurate. In the event that the dates for the coverage aren’t current or will expire prior to the job’s completion, the client must request an updated certificate. According to VersiTrax, this entire process will be easier with help from an insurance certificate tracking system.
It is likewise important to note that certificates should contain a concise description of the insured’s limits and policies given for every coverage type. This basically means that the section for general liability must have a summary of the policy limits and specifically indicates the basis for which the coverage applies, whether on occurrence or claims-made. Furthermore, since state statutes explicitly determine injured workers’ benefits, a limit for worker’s compensation should not be included. However, the limits for the liability coverage of the employer must be indicated.