What is a certificate of insurance for contractors?

If you’re a contractor, business insurance is often required before you can bid on a project and get to work. A certificate of insurance, also called a COI, is quick, shareable proof that your business is covered. It proves to clients that you’re a professional who takes their work seriously. And it shows that you know how business insurance and liability insurance can help protect you and your clients from the costs of accidents or property damage. 

Jump ahead to learn:

• When do contractors need a certificate of insurance?
• Why do clients ask contractors for proof of insurance?
• How can contractors add an additional insured to their COI?
• How contractors can get a certificate of insurance

A certificate of insurance (COI) is a document that proves your contractor business insurance is active and up to date.

Companies or individuals you work with will request your COI to make sure they won’t get stuck with a large bill if something goes wrong. 

Most insurance companies issue certificates of insurance that meet standards set by a nonprofit organization called the ACORD. That’s why these documents are often referred to as ACORD certificates or certificates of ACORD.

If you’ve had insurance for some time, you’re probably familiar with the PDF version and may even carry a physical copy to job sites. Contractors also use digital COIs which can be shared instantly from a phone or tablet — a must-have for time-sensitive projects.

A COI shows details about your business insurance coverage, including:

• The types of insurance you carry: It lists your active policies, such as general liability insurance or workers’ compensation insurance.
• Policy numbers and coverage limits: It details how much protection your policies could help provide.
• Effective and expiration dates: This lets clients know when your coverage starts and ends.
• Your business name and insurance company: Information to confirm the policy is active and valid.
• Additional insureds (if any): Other parties covered under your policy.

When do contractors need a certificate of insurance?

Clients, property owners and general contractors usually want proof that your business has active coverage in case something goes wrong. Contractors are often asked to show a COI before starting a new job or signing a contract. 

You may need to provide a COI when you:

• Apply for or renew licenses or professional certifications that require active insurance.
• Bid on projects that require proof of contractor insurance.
• Apply for a permit for a job.
• Work with subcontractors or vendors who need confirmation of coverage.
• Enter commercial job sites that have liability or safety requirements.

Having your COI ready — especially a digital version you can share instantly — helps avoid project delays and shows clients you’re serious about protecting your work.

Why do clients ask contractors for proof of insurance?

To protect their financial interests, clients often ask for proof of insurance before signing a work contract. They want proof that your coverage limits can help pay for potential damage or injuries on the job.

Let’s say you’re a contractor renovating a hotel, and you or your employee accidentally damage an essential pipe.** If it’s your fault, you could be held financially responsible for the repairs and lost time on the project.

Without insurance, you would be on the hook to cover the costs of those damages out of pocket — which could be financially devastating. Or the hotel would have to pay for it, potentially hurting your reputation and future business prospects.

With a certificate of insurance, the client has confidence that you’re ready to handle risks responsibly. Insurance can help protect both sides, and the certificate proves the coverage is valid.

How can contractors add an additional insured to their COI?

A client or project owner will ask to be added to your business insurance policy as an additional insured. This means that they’re asking to be included by the protections of your policy, too. Someone who is additional insured is also listed on the COI.

For example, a project owner might ask to be listed as additional insured on your contractor’s insurance. If a visitor to the job site trips over your equipment and gets hurt, both you and the project owner could be named in a lawsuit. Because the project owner is listed as an additional insured, your insurance could help cover them, too.

How contractors can get a certificate of insurance

Any insurance policy you take out as a contractor should offer instant, easy access to your proof of coverage. 

Some insurance companies make customers call to request a COI, and then wait days or weeks to receive it by mail or email. That delay can grind your project to a halt.

Other insurance companies may charge $7 to $15 per certificate — or more if you need to add multiple additional insureds. For contractors who send out a lot of bids, those costs can add up.

With NEXT, you can download or share an instant digital certificate of insurance anytime you need it at no additional cost. Just log in to your account on our website or mobile app and get access to real-time, shareable proof of coverage.

You can email or text your certificate to anyone who needs it, or you can share a link. You can also add additional insureds anytime. There’s no waiting, no printing and no fax machines — just quick, online access when you need it.

Get a COI with NEXT in about 10 minutes

NEXT makes it fast, easy and affordable to share proof that you protect your small business — and you can do it all 100% online.

We’ll ask a few questions about your business and give you a quote. You can select your coverage options and buy your policy in about 10 minutes. Your certificate of insurance will be available after you buy, and you can access your policy 24/7 via web or mobile app.

If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Start a free quote with NEXT.