Why You Should Always Require Certificates of Insurance from Anyone You Hire
Whether you’re hiring a contractor, subcontractor, vendor, or service provider, one of the most important risk management steps you can take is requiring a Certificate of Insurance (COI). A certificate isn’t just paperwork – it’s proof that the party you’re hiring carries insurance and that their coverage properly protects you if something goes wrong.
Too often, businesses assume a contractor’s insurance will automatically cover them. Unfortunately, that’s not always the case. Knowing what to look for – and what to require – on a certificate can help prevent costly gaps, lawsuits, and insurance disputes.
What Is a Certificate of Insurance?
A Certificate of Insurance is a document issued by an insurance company or agent that summarizes key details of an insurance policy, including:
- Types of coverage
- Policy limits
- Policy effective dates
- The named insured
- Additional Insureds and special provisions
While a certificate does not change the policy itself, it confirms that required endorsements are in place when properly issued.
Why Certificates Matter
If a contractor causes property damage or bodily injury while working for you, their insurance should respond first – not yours. Without the right language and endorsements on the certificate, you may find:
- Your own policy is forced to pay first
- Your loss history is affected
- Your premiums increase
- You’re left defending yourself in a lawsuit
Requiring and reviewing certificates helps transfer risk back to the party creating it.
What You Should Be Requiring on a Certificate of Insurance
Not all certificates are created equal. Here are the key items you should require and verify every time.
- Adequate Coverage Types and Limits
At a minimum, most contractors should carry:- Commercial General Liability
- Workers’ Compensation (if they have employees)
- Commercial Auto (if vehicles are used)
Make sure the limits meet your contract requirements and are appropriate for the scope of work. Low limits can leave you exposed even if everything else is correct.
- Additional Insured Status
This is one of the most critical requirements.
You should be listed as an Additional Insured on the contractor’s General Liability policy. This means:- You are protected under their policy
- The insurer will defend you if you’re named in a claim related to their work
✅ Best practice: Require Additional Insured status for both ongoing and completed operations, especially for construction or installation work. Simply being listed as a certificate holder is not enough.
- Waiver of Subrogation
A Waiver of Subrogation prevents the contractor’s insurance company from coming after you to recover claim payments. Without this waiver:- Their insurer could pay a claim
- Then sue you (or your insurer) to get reimbursed
Requiring a waiver helps avoid finger-pointing after a loss and keeps claims where they belong.
- Primary and Non-Contributory Wording
This provision ensures that:- The contractor’s insurance pays first
- Your insurance does not contribute to the loss
Without primary and non-contributory wording, insurers may try to split the claim between policies, which can increase your costs and impact your loss history. This is especially important when your business or property is added as an Additional Insured.
- Proper Policy Dates
Always confirm:- The policy is active
- The policy dates cover the entire duration of the work
If a policy expires mid-project and isn’t renewed, you could be exposed without realizing it.
- Certificate Holder Information
Make sure:- Your legal business name is correct
- Your address is accurate
- Any contract or job reference is noted in the description section
Errors here can cause delays or denials when a claim occurs.
A Certificate Alone Is Not Enough
A common misconception is that the certificate itself guarantees coverage. In reality:
Coverage is provided by policy endorsements
Certificates should reflect those endorsements accurately
For higher-risk projects, it’s often appropriate to request copies of the actual endorsements, not just the certificate.
Final Thoughts
Requiring certificates of insurance – and knowing what to look for – protects your business, your assets, and your bottom line. It’s a simple step that can prevent major financial headaches down the road.
If you’re unsure whether a certificate meets your requirements, have your insurance advisor review it before work begins. Catching issues upfront is far easier than fixing them after a claim.