What Is a Certificate of Insurance (COI) for Contractors — and When Do You Need One?

To help your business remain viable, contractor’s insurance should be a crucial part of your financial strategy. Insurance also puts other parties’ minds at ease when they want to hire you as a specialty contractor. Before you can get hired and begin work, you’ll need to prove to owners and/or general contractors (GC) that you have policies in force. A certificate of insurance (COI) is a valid form used to prove that you carry the appropriate insurance policy. It is typically provided to a GC or project owner by the insurance company or a representative of the company. Construction contracts often require that each hired specialty contractor maintain a minimum level of insurance coverage, and a COI will reflect that status. 

In this article, we’ll explain what contractors need to know about COIs, when they are needed, and how they work in construction.

Why a certificate of insurance matters

If you’re bidding on contract work, you will likely need a COI per the terms of a legal agreement. Some parties — like owners and GCs — will want some assurances that any not-at-fault, job-related accidents or injuries will not cause them financial harm. So, providing a COI will help you meet contract requirements and put other parties' minds at ease. 

There are a few parties that might require a COI from your contracting business. Aside from owners and GCs, a government entity may want to see proof of liability insurance. You may be seeking to work for a local, state, or federal government, and these bodies will want to know that you carry liability insurance before you’re awarded — or even considered — for a bid.

Many things can go off the rails during a construction project. A plumber could leave a line uncapped causing water damage, or a roofer could drop plywood on a worker below, causing injury. Since a GC or owner may not be found responsible for these accidents, they look to the specialty contractor’s general liability policy to help pay for damage or injuries. A COI provides evidence of in-force specialty contractor’s insurance. 

COIs can be used for circumstances other than those meant to show proof of insurance. 

• While a COI shows evidence of insurance, it may be used to include language that reflects an additional insured (AI) endorsement, or the addition of another party (owner, investor, GC) to your specialty contractor’s policy.  
• A COI may include a waiver of subrogation endorsement that basically asks your insurance company to pay an insurance claim, while giving up the ability to recover (or subrogate) damages from the party that actually caused the problem. 
• Most COIs give information on general liability insurance, but can also be used to show proof of commercial automobile or workers' compensation coverage. 

When do I need to provide a COI?

Project owners and GCs have their reasons for wanting COIs, and they are not the only parties that may request this proof. 

• If you rent storage or office space from a building owner, they may ask for a COI before you sign a lease. If you should cause damage to the property, chances are good that they’ll first look to your insurance policy for protection. 

• A supplier provides you with tools and building supplies. This party may want a COI to ensure they are protected from liability in the event of a product-related injury or accident. 

• You may secure funding for equipment through a bank or other lender. To protect their interests, these institutions will require property insurance on a backhoe, for instance, if it’s financed through their operation. 

What information is included in a COI?

A standard-form COI that presents proof of liability insurance will include this information: 

• The name and address of the insured party 
• The insurance agent’s or broker’s contact information 
• The name of the insurer(s) providing coverage 
• The type of coverage 
• The amount of coverage 
• A policy number
• The policy’s expiration date 
• A description of coverage 
• The name and contact info of the COI requestor 

It’s important to review each COI, ensuring that all of the above information is included and displayed on the appropriate form. 

Why contractors should keep a record of all COIs

Even though a COI may expire, tracking those certificates still holds value. There may be incidents that require you to document your insurance status while you perform certain jobs. 

An insurance claim can be filed many years into the future for an incident that occurred many years in the past. So, a COI can provide proof of coverage at that previous point in time. 

Staying organized is an additional benefit to tracking COIs. You may need to maintain insurance records for audit purposes, or to help draw a line between employee and independent contractor statuses. A system for tracking COIs will also help save time and money by having important insurance documents readily available in one central location. 

How long should I keep my COI?

There’s no set rule on keeping a COI. But, it’s prudent to store the documentation as long as your business is in existence — and then some. As mentioned, insurance claims can occur many years in the future, and having a COI to exhibit proof of insurance is one more layer of protection for your company. 

When should I ask for a COI?

If you’re a GC and hire specialty contractors to perform work, you need to ask each of these parties for a COI. This is because the nature of the specialty contractor relationship adds additional risk to the equation. You could be held liable for injury or damage caused by a specialty contractor if they are not insured. 

Specialty contractors and GCs must both ask vendors for COIs. There’s always a chance that a defective tool or faulty product supplied by a vendor could result in an accident on the job. As with uninsured specialty contractors, the legal system is such that a harmed party may seek damages from you if that supplier operates without insurance. 

What’s the difference between a COI and an insurance policy?

A COI is used to show another party that you have contractor’s insurance in place. A COI can also be used to show a GC or owner that you’ve named them by endorsement as an additional insured on your contractor’s liability insurance. In these respects, a COI is a summary of important information included in an insurance policy— and therein lies the difference. 

The actual insurance policy issued by the career is a much lengthier and more detailed document. It is a contract between your business and the insurance company. The policy contains all the pertinent information needed when you might have questions about what perils are covered or what you must do if a potential claim takes shape. 

A COI is a very common document in the construction insurance world. It is an official summary of coverage issued by a representative of an insurance company. A project owner might request a COI to have proof that your insurance coverage meets the requirement of a contract, for example. Since insurance claims can be made retroactively, it’s wise to retain COIs as long as your business operates. 

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