A certificate of insurance confirms the existence of a specific type of coverage held by a person or business entity, and is often required for business transactions with high risk. It includes information about the insured party, the nature and extent of coverage, liability coverage, premiums, and payment schedule. It is commonly used in situations such as temp agency employment and granting proprietary information privilege.
A certificate of insurance is a document issued by an insurance provider as a means of confirming the existence of a specific type of coverage held by a person or business entity. The detail found in the document varies, depending on the insurer’s practices and any government regulations that may apply to the insured’s location. This type of insurance confirmation is often required when a business transaction carries significant risk and the possibility of loss and liability is considered high.
While the types of information provided in a certificate of insurance vary from country to country, there are some basic types of data that are generally included. The legal name of the insured party is listed on the document, along with the date the insurance coverage was established. The nature of the insurance coverage is also documented on the certificate, along with the extent of that coverage. This makes it possible to determine not only the existence of coverage, but also the total amount of coverage that is provided under the current policy. Since a certificate of insurance is often required to engage in business that involves a significant amount of risk, knowing how much coverage is present is just as important as knowing that coverage exists.
Various provisions contained in the terms of insurance coverage are also included in the detail found on a certificate of insurance. The scope of liability coverage is often found in the text of the document, along with information about any type of exclusion that may apply to that coverage. Data about premiums is often included, as well as the schedule for paying those premiums. This is important, as the detail provides important information about when the next premium payment is due and what must be paid to maintain coverage.
The use of a certificate of insurance is common in many situations. Employers who work with temp agencies may require proof of insurance coverage related to the temp’s employment to be provided before the assignment begins. For example, a taxi company that hires drivers through a temp agency may insist on proof of insurance that protects the interests of both the driver and the taxi company before assigning a route. Similarly, consultants granted proprietary information privilege may also present proof of liability insurance prior to receiving access to that data.
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