Businesses boost the economy. But being in business can be risky and scary, as many business owners and consumers are concerned over lawsuits. Thus, business owners, including those operating small businesses, must confirm if someone they do contract work with carries liability insurance.
Whatever your business may be, it is probable that you will be in a situation where you will request to see proof of insurance. On various occasions, you might hire contractors who provide services that require insurance, such as a plumber, electrician or roofer. Proof of insurance or certificate of insurance confirms that the contractor has valid and current insurance conforming to the minimum your state requires.
It is essential to have your proof of insurance with you when you meet with your client, as it can help close the deal. You can get this vital document from your insurer. Most insurers issue a certificate of insurance to new policyholders. You can make a request if you do not have a copy. Did you know that Next Insurance allows you to get your certificate of insurance in minutes?
Definition of proof of insurance
Proof of insurance is a document, typically a card, showing that the person has valid insurance issued by an insurance company. The insurance company provides the document which contains the insured’s policy information and the effective dates of the insurance.
Why should a business owner request proof of insurance?
As a business owner, you know that you should have at least a general liability insurance. You may need more if you have several employees. Thus, you must make sure that the contractor you are working with also has a business insurance policy.
You will ask for proof of insurance because:
- The contractor may cause some property damage while providing service for you. If the contractor does not have the required insurance coverage, you will pay for the damage.
- If the contractor you hire does not have insurance and causes bodily harm to a person while working for you, you are legally responsible to pay for the injured person’s medical bills.
- The contractor with liability insurance shows that they are professional and responsible.
What information should you look for?
The certificate of insurance is your proof that the contractor has liability insurance. Their insurance broker can easily provide this if the contractor does not have a copy.
- Make sure that the insurance coverage is valid and current. Look at the effective and expiry dates of the policy.
- Confirm that the insurance policy covers the business or the person. You must check the name on the insurance certificate.
- If you are working with a contractor, confirm that the policy coverage has a minimum limit of $2 million per occurrence.
Do not hesitate to ask the contractor or service provider to show proof of insurance. It is a vital practice to ensure that your business will be safe while the contractor is working for you. That important piece of document means you will not be financially liable for any damage caused by someone else.