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Certificate of Liability Insurance: Requirements For Small Businesses

Certificate of Liability Insurance: Requirements For Small Businesses

Starting a small business requires more than just great product or service marketing. Consider getting documents like a certificate of liability insurance for liability concerns. Look at it as a form of shield for your business to protect your assets against substantial claims.

We’ll go into the details here of the purpose of the certificate - how to get it as well as why you need it for your business. We know it is already difficult to establish a small business. So here, we’ll make it simple to understand. 

What is a Certificate of Liability Insurance?

A certificate of liability insurance (COI) is a form, receipt, or document issued by your insurance company that proves your small business has liability insurance coverage. Depending on the type of insurance policy you obtain, you will have the details on the certificate differently.

Signing a Commercial Lease

You can use a certificate of liability insurance to win a lease contract and sign it earlier. With it, you can get the trust and the confidence of a landlord selling commercial space. You get better leasing terms if the landlord knows your insurance policy can cover any damage you make. 

Contract Working

If you are a small business that renders services, your client might ask for a certificate of liability insurance. This will give them the confidence that in case you cause any damage to their business, you have the appropriate policy insurance to answer it. 

Attracting and Growing Your Client List

Finally, you can better attract and grow your client when you pitch to them that your services or products are covered by liability insurance!

When is a Certificate of Liability Insurance Needed?

There are a number of reasons why a certificate will be needed or asked from you, including the following:

  • When a client requires it to finalize a contract
  • If your landlord requires it upon leasing a commercial space
  • If there is a claim against your service or product 
  • If you need to confirm your insurance coverage

Ultimately, you need a certificate of liability of insurance for both your protection and your clients - to give you both peace of mind. 

At this point, you must be wondering how to get a certificate of liability insurance. Read through to the next section to learn how quickly you can secure one.  

How Do I Get a Certificate of Liability Insurance for my Small Business?

The purchase of your policy will initiate the issuance of a certificate of general liability insurance. Simply look for the best policy for your type of business and the kind of industry you operate in and purchase once the coverage meets your approval. 

As a small business owner, you must expect that clients will validate the existence of your insurance by directly inquiring with your insurance company rather than from you. Typically, the client confirms the name of the policyholder you placed to find an exact match with your company. 

What Does it Cover?

Once you secure a certificate of liability insurance, you can rest assured that you are protected from claims resulting from injuries or damage to people or property. It covers the details of the insurance policy you purchased from your trusted insurance company. You will find a general liability section on the certificate that separates limits and indicates whether the insurance policy can be applied to a claim. 

Here’s some of the coverage for liability insurance for small businesses in particular:

Third-party bodily injury

Your liability insurance can cover for any injury that occurs to a client or customer within your business premises. For instance, if a customer trips in an area under construction within your commercial space, then your certificate is proof that you have an insurance policy that can cover any injury they sustained.

Third-party Property Damage

This covers the damage caused by one of your employees on a client’s property. A perfect scenario would be if your employee rendered services and caused any property damage, your certificate can cover for it.

What Doesn't it Cover?

A certificate of liability insurance does not cover commercial auto damage or employee medical expenses. In addition, errors in service are also not covered by general liability insurance. 

Property Damage

Yes, a certificate can protect your small business against lawsuits over damage caused by one of your employees to a client’s property. However, it cannot be used to help cover for the reconstruction of your own property due to damage. 

If you are not leasing commercial space and you have your own building, it is best to obtain a Commercial Property Insurance that comes with a business owner’s policy - this covers the replacement of stolen or destroyed items in your property. 

Employee Medical Expenses

As we have mentioned, property damage is not the only thing excluded in the coverage of a certificate of liability insurance but also employee medical expenses. Indeed, liability insurance can protect you against lawsuits over injuries, but it cannot be used to cover medical costs if an employee is injured on the job. 

You will need Workers’ Compensation Insurance to help cover any work-related injuries or illness and pay for medical treatment. 

Service Errors

If you are a small business service provider, you will need Professional Liability Insurance to cover any claims related to errors. 

How Much Does a Certificate of Liability Insurance Cost?

Regardless of the policy you obtain, a certificate of liability insurance costs nothing. It comes free with the insurance policy you get. Similar to a receipt, the certificate is proof that you have availed and paid for a particular insurance policy. 

Be Responsible - or Be Liable

Getting ahold of this certificate should protect you and your business during unforeseen cases of accidents or injuries in your workplace or as caused by your own employees.

When it comes to a client’s perspective, they will feel more confident in working with you. Often, a certificate of liability insurance should help you close your first contract with a client. 
Many companies only hire contractors if they are aware they won’t be held liable for damages, injuries, or substandard service that insurance covers. Presenting a certificate of liability insurance to a client will make your business’ service look more appealing!

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Assured Standard will protect your business with the right insurance, depending on your needs. Now more than ever, it’s crucial to have the right general liability insurance experts on your side. Protecting the future of your business starts today.
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