Why You Need A Certificate Of Insurance For A Home Project
May 31, 2023
When you renovate your home, you want to do it safely. Renovation projects can be risky, and you need to be certain that if your contractor damages your property, they’ll have the money to pay you back.
How do you know that a contractor has the appropriate insurance coverage for your needs? You ask for a certificate of insurance.
What Is a Certificate of Insurance?
A certificate of insurance (COI) is a document certifying (it’s right there in the name!) that a particular entity has an active insurance policy with an insurer.
These documents are essential for any home project, as they prove that a contractor or subcontractor has the insurance they need to work on your home. These documents are issued at the time by the Broker —not the contractor—so there’s little risk of fraudulent or inaccurate documentation.
How a Certificate of Insurance Protects You
Renovating a home comes with a number of risks—even if the renovations are small. Workers can get hurt. Your property or your neighbors property can be inadvertently damaged. These things pose a serious financial risk—an insurance policy protects both you and your contractor from these risks.
The contractor may need more than one certificate of insurance to show that they meet the insurance requirements to work on your home. These insurance coverages should include:
- Commercial general liability insurance (CGL)
- We recommend under most cases a minimum of $2,000,000 per occurrence.
- Contractors Errors & Omissions.
- Course of Construction or Installation of Property coverage
Together, these policies protect your belongings and the workers who are renovating your home. The umbrella insurance policy can also step in if, for whatever reason, your contractor’s insurance policy limits have been exceeded.
How You Can Obtain a Certificate of Insurance
The contractor you hire can obtain their certificate of insurance from their insurance Broker. The insurance certificates will include the name of their insurance carrier, so you’ll know that:
- The certificate of insurance is reflective of coverage that is currently in place
- The certificate of insurance is valid
By knowing which insurance company is providing coverage for your contractor, you’ll be more confident that the certificate of insurance is valid.
What Details You’ll Find on a Certificate of Insurance
The certificate of insurance should contain a number of details, including:
- The name and address of the insured (your contractor)
- The name of the insurer
- The types of insurance policies (Commercial General Liability, Umbrella, etc.)
- Coverage limits
- The effective date of the policy
- The policy expiry date
- The date the certificate of insurance was issued
- Your name and address (on the COI, you’re known as the “certificate holder”)
- A signature from an insurance agent
- Your name should be added not just as “ Certificate Holder” but also as “ Additional Insured”. This will protect you from third party claims due to damage caused by your hired contractor.
You’ll want to review all of these details before the contractor begins work. One important detail to review is the expiry date—if the policy is going to lapse before the estimated date of completion of your project, you’ll want to ask for another certificate of insurance on the expiry date to ensure the contractor has renewed their insurance.
With a certificate of insurance, you can ensure that your contractor has the insurance coverage you need to keep everyone safe during a home renovation. Want to get a better understanding of COIs? Call Nation West Insurance—we’ll be happy to answer any questions you might have.