Whether planning your project immediately or a few years from now, you will need a certificate of insurance (COI). Most folks are not familiar with a COI so in this blog we would like to define a COI and let you know what you should request from your contractor. The best contractors already have and know they need to supply this certificate.
Why Would You Need A COI?
A certificate of insurance is needed in the case of a project or job in which liability concerns and the possibility of great financial losses are very real. In such a case, a COI from your contractor will prove that certain liabilities will be covered by their insurance program. A certificate of insurance (COI) is a document that serves as proof of business insurance. It is a snapshot of an insurance policy, containing all the most important details, and it helps protect against third-party risk.
Ask Your Contractor To Get A Copy Of Their COI From Their Insurance Agent
The contractor you are working with will need to contact their commercial insurance agent and provide them with your name, address, and insurance requirements. The agent will issue the COI. If their insurance coverage does not meet your requirements, you can buy the extra coverage or decline the bid from that contractor. But it may be worth paying for the extra coverage and preventing you from looking for another contractor.
What The COI Should Cover
You want to be fully covered and probably are not familiar with what coverage limits to require.
Some of the requirements depend on your project but here are a few recommendations:
- Liability Insurance – Liability business insurance covers claims made against your contractor and his business for someone who experienced injury or property damage. This type of insurance coverage would pay if your contractor causes damage to your property or injury to you or your family. Your contractor should have at least $1 million in liability coverage.
- Business Umbrella Insurance – Sometimes known as an excess liability policy. This policy will supplement the property damage and bodily injury costs if the cost exceeds your business’ commercial auto liability limits. If you don’t have a commercial umbrella policy, you’d have to pay the amount that exceeds your policy limit, putting your business at financial risk. That’s why it’s important to have umbrella coverage.
- Worker’s Compensation Insurance – Worker’s compensation or worker’s comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence. If a contractor working on your home gets injured on the job and he isn’t covered by workers compensation, he could sue you personally for his injuries.
- Commercial Auto Insurance – Commercial auto insurance is a business insurance policy that applies to autos owned by or used by your contractor. While this coverage isn’t usually necessary for a home project, you may want to have it included as an insurance requirement to ensure protection to any materials being transported to your home.
When You Have The COI Form From Your Contractor, Check The Following:
- Name of the contractor
- Insurance company or companies – sometimes different insurance companies carry different types of coverage for a business.
- Types of insurance – make sure it includes all your requested types of insurance.
- Policy limits – make sure the limits match the requested amount.
- Effective date – make sure the policy does not end before the finalization of your project.
- Special instruction – note the job details, the property address, and make sure you are listed as an additional insured. This way you will be notified if the policy is canceled, leaving you unprotected.
- Worker’s comp. Sole proprietors and officers of a corporation can opt out of worker’s comp to make sure your contractor is included in the worker’s comp policy. Every one working on your home should have worker’s comp coverage.
Just remember that getting a COI takes time and can be a nuisance holding back the starting date of your project. However it is a crucial part of the project process. You need to protect yourself with a COI.
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About Gartman Insurance
About Gartman InsuranceWe are your trusted, family-owned independent insurance agency. Your family, your business, and your possessions are all important to you, but you may not know how to best protect them. We have the experience and local knowledge to navigate the unique risks you face, serving as your insurance advisor. Since 1999, Gartman Insurance Agency has proudly served our customers in Kentucky, Ohio, Indiana, Tennesee, and Alabama, helping them to find the right insurance coverage to fit their needs. Our customers are our priority, and we are always finding ways to better serve them, whether that’s helping them find a better policy or giving them the power of choice when it comes to their insurance coverage.
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