Benefits

• The benefits of a certificate of insurance include the fact that a third party is able to receive and maintain reliable evidence that a specific insurance policy is in place. Specifically, a third party has evidence of insurance coverage through a certificate that legally is relied upon because it issues from an insurance company directly.
  
  

Features

• The specific features and information included on a certificate of insurance include the effective date of the insurance policy as well as a general explanation of the type of insurance coverage purchased by the consumer. A certificate of insurance also includes the types and the total dollar amount of each type of coverage provided by the underlying policy of insurance.
  
  

Effects

• The primary purposes of a certificate of insurance is to document that certain insurance coverage is in effect. For example, if a contract exists for a company to tear down a building, the person seeking the service from the demolition company requests a certificate of insurance to ensure that the contractor maintains appropriate insurance coverage to protect against any potential liability.
  
  

Time Frame

• If an underlying insurance policy is renewed, a new certificate of insurance is required. The certificate of insurance only reflects information pertaining to the policy in force at the time the certificate issues. Even if there are no substantial changes through the policy renewal process, the certificate of insurance lapses and is of no effect when the initial underlying insurance policy is renewed.
  
  

Warning

• By definition, a certificate of insurance provides only skeletal information about the content of an underlying insurance policy. Therefore, if you require proof that an individual or company you do business with maintains appropriate insurance, make sure you obtain any additional supporting documentation if anything on the certificate of insurance is unclear or insufficient in your mind. Do not make assumptions based on the general information provided on a certificate of insurance.