For many individuals and business owners, it is standard procedure to obtain insurance certificates for any person or company who performs work for them. If you are new to the business world, however, you may not understand the importance of keeping insurance records. Any vendor who enters your home or place of business should furnish proof of coverage with a certificate of insurance. You have the right to refuse business to those who fail to do so.

Certificates of Insurance

A certificate of insurance, also known as an insurance certificate, COI, or proof of insurance, is a document used to verify that insurance coverage is in force. A certificate of insurance generally provides information about the policy, such as the policy number, and the effective dates of coverage. The certificate also provides the contact information for the insurance rep, and the total limits of coverage provided by the policy.

Peace of Mind

It's always a good idea to get insurance certificates from any company or individual with which you do business. A vendor may not seem like a big deal, particularly if the vendor is only delivering items to your home or business. Even so, make sure you get a copy of the insurance certificate, and keep it on record. Any vendor who sets foot on your property, or handles goods on your behalf, can still pose a risk for injury or damage. Maintaining a record of insurance certificates can be invaluable if the unforeseen does occur, and the vendor attempts to sue you or your company for damages.


Obtaining the certificate of insurance from all vendors can also provide an added layer of protection for yourself and your business. If you or your business become the subject of a financial audit, a certificate of insurance can be used to verify that a vendor was an independent contractor rather than an employee, and therefore not subject to payroll taxes. In addition, your own insurance company may conduct routine audits to verify that your policy limits are in line with the level of business you are conducting, indicates Insurance Audit Resolution Group. Once the insurance auditor finds you have paid workers or vendors for whom you cannot provide insurance certificates, they may be included in your payroll totals, which could increase your insurance rates.


There may be times when it is considered acceptable not to request a certificate of insurance from a vendor. If the activity being performed by the vendor is relatively low risk, such as removing newspaper, it may not be necessary to obtain the certificate. Additionally, if the work being performed is minimal and will amount to less than $2,000 for the year, an insurance auditor would likely exclude the activity anyway.