Trust Library / Insurance
COI basics, liability limits, workers comp, and step-by-step verification. Don't hire a contractor without confirming these details first.
What is a Certificate of Insurance (COI)?
A Certificate of Insurance is a one-page document issued by the contractor's insurance company (or their agent) that summarizes their active coverage. It shows the types of insurance they carry, the policy numbers, the coverage limits, and the effective dates. It is not something the contractor prints from their own computer — it comes from the insurer.
The COI is your proof that the contractor has active, valid insurance at the time of your project. It typically takes less than 24 hours for an agent to issue one. Any contractor who says "I can't get one" or "it takes weeks" is either uninsured or uncooperative — both are disqualifying.
General liability insurance
General liability covers property damage and bodily injury caused by the contractor's work. If a plumber floods your basement or a roofer drops materials on your car, general liability is what pays for the damage. This is the absolute minimum insurance any contractor should carry.
For residential work, look for a minimum of $500,000 in general liability coverage. For larger projects (additions, whole-house renovations, structural work), $1,000,000 or more is strongly recommended. The COI will list this under "Commercial General Liability" with per-occurrence and aggregate limits.
Workers compensation insurance
Workers comp covers medical costs and lost wages if one of the contractor's employees is injured on your property. In most states, contractors with employees are required by law to carry workers compensation insurance. If a contractor tells you "my guys are all independent subcontractors" to avoid workers comp requirements, verify that claim carefully — misclassification is common and the liability falls on you.
Without workers comp, an injured worker could file a claim against your homeowner's insurance or sue you directly. This is one of the most financially dangerous gaps in contractor coverage. The COI should show workers compensation coverage with the state listed and an active policy date.
What to look for on the COI
- Named insured: Should match the contractor's legal business name (not a different company)
- Policy dates: Must be current — coverage should not expire before your project is scheduled to complete
- Coverage types: General liability at minimum; workers comp if they have employees
- Limits: Per-occurrence and aggregate limits that match what you were told
- Certificate holder: Ideally, you or your property address should be listed as the certificate holder — this means you'll be notified if the policy is cancelled
How to verify the COI is real
The COI should come directly from the insurance agent or company, not from the contractor. If the contractor hands you a printed copy, call the insurance agent listed on the certificate to confirm it's legitimate and the policy is still active. This takes five minutes and can save you from a six-figure liability.
Look for the ACORD form number in the bottom-left corner of the certificate. Most legitimate COIs use standardized ACORD forms (ACORD 25 for general liability). If the document looks homemade or doesn't follow the standard format, be suspicious.
What if the contractor is a sole proprietor?
Sole proprietors without employees may not be required to carry workers compensation in some states, but they should still have general liability insurance. Some sole proprietors choose to carry workers comp for themselves — this is a positive signal because it shows they take risk seriously.
Even if workers comp isn't legally required for a sole proprietor in your state, confirm they have general liability. If they're working on your property and cause damage, you need to know there's insurance backing them up.
The bottom line
Asking for proof of insurance isn't rude — it's responsible. Any professional contractor will produce a COI without hesitation. If they push back, stall, or get defensive, that tells you everything you need to know.
For the complete contractor verification process, read our step-by-step verification guide.
Next steps
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