On purchase of insurance, they issue us a contract signed by the two parties – you and your insurer. We should keep this contract in uttermost confidence, as it is our legal ground for claims and bridge of contract. However, when required to show proof of insurance to third parties, brandishing your contract might not be the wisest idea. This is why an insurance certificate is also issued, as it serves as evidence of proof.
What is an insurance certificate?
Insurance certificates is a document that provides the specifications of insurance coverage. It serves as proof that the insurance is legit, and also includes extra information like:
- Policy number
- Name of insured
- Types and limit of the coverage
- Name of the insurance company
- The effective duration of the policy
The insurance company issues an insurance certificate to the insured by the insurer and is a reliable means of highlighting the information in the actual contract. They usually require one party in a contract, to ensure that the other party has the right coverage. A good example of this is for contractors before the insurer awards a contract.
Is an insurance certificate a contract?
An insurance certificate is like a summary of what it contains in the actual contract. It is reliable and trusted to be accurate because the insurer issues it through an agent. However, it only remains a certificate, and it is not the insurance contract. They always state the fact plainly in the certificate.
Is an insurance certificate the same as evidence of insurance?
An insurance certificate is exactly an evidence of insurance. This is the primary purpose why it exists. It is taken and considered as highly as your insurance contract itself. Instead of showing your insurance contract as a form of evidence, you can put forth your insurance certificate.
Why do I need an insurance certificate?
Insurance certificates are especially useful in times where there is a high risk of losses. Like the previous example we used, for most high-profile contract bidding or awarding, contractors must show their proof of insurance. This protects the interest of the company awarding the contract and eliminates the risk of losses. A good example of a contractor’s insurance is the liability insurance for work area injuries and accidents.
Many companies only hire contractors that have the means to assume any damages and injuries sustained during work, or from substandard work.
Validating an insurance certificate
As the insured, you should ensure that the insurance certificate issued by your insurance company has the right information. This is important because companies request an insurance certificate from the insurance company directly, rather than the contractor (insured). Information like the policy coverage dates and client name should be an exact match of the company’s expectations.
On purchase of insurance, we should request an insurance certificate as it is very useful and a valid form of proof of your coverage. It is very important especially for contractors in their relationship with third-party clients. Although valid and carrying legal indications, an insurance certificate is not a contract and is totally different from the insurance contract.