COIs are immensely important to businesses and independent contractors. They provide confidence for all parties involved in a business transaction, so contractors and business owners should have them on hand to show clients at all times. If you are wondering why COIs are important, imagine the following scenario:

An established construction company hires a subtractor to complete a project. The subcontractor accidentally causes $100,000 in damage to a building while working on the plumbing. Fortunately, the subcontractor has provided a COI to the construction company prior to commencing work. The construction company reviewed the COI and was assured that the subcontractor had insurance coverage that can help pay for losses caused by the subcontractor.

Having a COI on hand can be highly beneficial to a company. A COI shows customers and clients that the company maintains insurance that can help pay for the cost of damages in a single brief and easy to understand document. Potential clients may also request to see a COI before they agree to do business with a company (e.g., a homeowner engaging a contractor to perform work at their home).

COIs generally are most frequently requested in connection with the following commercial insurance coverages, including:

A COI only provides proof of insurance coverage on the date it is issued, so the party requesting a COI may also request that the insured notify them of any subsequent policy cancellation or modification.