Why Do I Need a Certificate of Liability Insurance?
If you own a business or perform work for others on a contract basis, it is likely that you must carry liability insurance to protect you from a lawsuit due to negligence. Situations may arise where you need to supply a certificate of liability insurance, which acts as proof that you carry liability insurance.
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Function
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A certificate of insurance serves as proof that an entity holds liability insurance in a specified amount. The certificate is issued by the entity's insurance carrier and is presented to another entity upon request.
Features
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A certificate of insurance will typically contain a variety of information. The named insured will be mentioned along with the name of the insurance carrier and agent or broker that issued the policy. The type and amount of coverage will also be listed, along with effective dates of coverage and any coverage limitations.
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Purpose
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You may need to supply a certificate of liability insurance in certain situations. For example, a subcontractor performing work for a contractor is typically required to furnish a certificate of liability to the contractor to protect the interests of the contractor in the event of the subcontractor's negligence or failure to perform.
Considerations
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Although a certificate of liability shows proof of coverage, it is not a substitute for the actual insurance policy. It serves as a snapshot of policy coverages.
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References
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