Obtaining a Certificate of Liability Insurance: A Comprehensive Guide

When it comes to understanding liability insurance, one common misconception is that there is a certificate of liability insurance. However, the truth is that what you need is a Certificate of Insurance. This guide will take you through the process of obtaining a Certificate of Insurance, including what insurances you need to buy, how to apply for coverage, and what information is required.

What is Liability Insurance?

Liability insurance is a type of insurance that protects individuals, businesses, and organizations from claims made by others when these claims arise from the insured's actions or failures. Commercial General Liability (General Liability Insurance) and Worker's Compensation Insurance are two of the most common types of liability insurance. Depending on the scenario, you may also need Auto Liability Insurance or Professional Liability Insurance.

Steps to Obtain a Certificate of Liability Insurance

Step 1: Purchase the Necessary Insurances

The first step is to ensure that you have all the insurances required to support the certificate. Typically, this includes:

Commercial General Liability Insurance: This covers bodily injury and property damage. Worker's Compensation Insurance: This covers your employees for on-the-job injuries. Auto Liability Insurance: This covers your vehicles in case of accidents. Professional Liability Insurance: This covers claims related to professional services provided to clients.

Step 2: Ensure Policies Are Issued

Once you have the necessary insurances, it is crucial that the policies are issued. Many companies and governmental agencies will not accept binders, which are preliminary agreements that give you coverage, but do not provide a permanent insurance policy. Therefore, it is important to work with an independent agent to apply for the needed coverage and ensure that the policies are issued.

Step 3: Provide Required Information

After securing the insurance policies, the next step is to provide the required information to any entity that needs a certificate of insurance. This typically includes:

Entity name Address Phone number Fax number

These details should be faxed or emailed to the entity, which will then include them in their records. It is important to confirm with the entity if they require the company to be listed as an Additional Named Insured, as this will incur an additional cost.

Step 4: Secure Additions if Required

If the entity requires the company to be listed as an Additional Named Insured, this will add an extra cost to your policy. Therefore, it is crucial to call your agent to get a quote on this additional coverage before quoting the price to the requesting entity. Remember, the requesting entity will pay for this additional coverage, and it should be reflected in your quote to avoid cutting into your profit margin.

Conclusion

Obtaining a certificate of liability insurance is a straightforward process once you understand the insurances needed and the steps involved. By following these guidelines, you can ensure that you have all the necessary coverage and can provide the required certificate to any entity that needs it.