What is a Certificate of Liability Insurance
A certificate of liability insurance acts as proof that you have insurance. Your certificate contains on a page the basic information about your policy. The certificate tells you the following :
Subcontractor
If you hire subcontractors, they need to show a certificate of liability before starting work for you. You need proof that they have insurance in case they get injured or damage your client’s property.You may want that worker to have the insurance agent send you directly a copy of the certificate of liability insurance to verify the policy is in force and the information on the workers’ copy is accurate. Likewise, if you become a subcontractor, you will need a certificate of liability insurance to show your employer, who might want to verify it with your insurance agent.
Vehicles
If you own a work vehicle, and it is damaged. If the damage occurs when it is parked either at your home, place of business or your client’s, it is automatically covered under your general liability. If a worker was in an accident while driving your vehicle, it would not be covered. In the latter case, you may want to have auto liability to protect you. Auto liability can cover vehicles owned by you and not owned by you, such as your employer’s vehicle. Your certificate of liability insurance will delineate what type of auto liability coverage you have.
Bids
You will not be considered for a government contract unless you have a certificate of liability insurance. Homeowners are demanding to see a certificate of liability insurance before they hire you to do work. Your certificate details what coverage you have. Most parties are interested in finding out whether you have workers’ compensation and general liability insurance. Together these coverages protect your clients against liability for injured workers and compensate them if you damage their property or person.
State Laws
Some states have passed laws to regulate certificates of liability insurance because the document has sometimes been embedded with false information by insurance agents and their clients. According to Business Sure.About. com, there are four areas outlined in the state laws:
Summary
A certificate of liability insurance is an invaluable document because it shows that someone you’ve hired has the necessary insurance. However, certificate fraud has been widespread enough for states to make laws. When you accept a certificate, make sure you verify that the information is accurate and who is actually covered by the policy.
