What Is a Certificate of Insurance?
A Certificate of Insurance (COI) is a one-page document issued by an insurance company that summarizes the contractor's active coverage. It lists the types of insurance held, the policy numbers, the coverage limits, the effective and expiration dates, and the named insured. It is not the policy itself — it's a snapshot that proves coverage exists as of a specific date.
The COI is a standard document in the construction industry. Any legitimate contractor will be familiar with it and can produce one within 24 hours by calling their insurance agent. If a contractor says they've never heard of a COI or can't get one, that tells you everything you need to know.
What the COI Should Show
When you receive a COI, look for these elements:
- Named insured: This should match the contractor's legal business name exactly. If the name on the COI doesn't match the name on the contract or the license, you have a mismatch that needs to be resolved before you proceed.
- Commercial general liability (CGL): This covers property damage and bodily injury caused by the contractor's work. For residential projects, look for at least $500,000 per occurrence and $1,000,000 aggregate. Larger or riskier projects may warrant higher limits.
- Workers compensation: If the contractor has any employees (including subcontractors in some states), workers comp is required by law in most states. Without it, an injured worker could file a claim against your homeowner's insurance or sue you directly.
- Policy dates: The policy must be active during your entire project. If the policy expires in 60 days and your project timeline is 90, ask the contractor to provide an updated COI once the policy renews.
- Certificate holder: Ask to be listed as the certificate holder. This means the insurance company will notify you if the policy is canceled or lapses during your project.
How to Verify the COI Is Real
A COI can be forged. It's a simple document, and scammers have been known to create fake ones using real-looking templates. The only reliable way to verify a COI is to call the insurance company or agent listed on the document and confirm the policy is active. Don't use a phone number the contractor gives you — look up the insurance company independently and call their main line or agent directly.
When you call, provide the policy number from the COI and ask: Is this policy currently active? What are the coverage limits? Is the named insured [contractor's business name]? This takes five minutes and eliminates the risk of a fake document. If the contractor objects to this step, that's a disqualifying red flag.
General Liability vs. Workers Compensation
These are two different types of coverage that protect against different risks. General liability covers damage the contractor causes to your property or injuries to third parties (for example, a delivery driver who trips over materials on your walkway). Workers compensation covers the contractor's employees if they're injured on the job. Both are important, but they serve different purposes.
A sole proprietor with no employees may not be required to carry workers comp in every state, but they should still have general liability. If they hire subcontractors, those subs should carry their own workers comp — and you should verify that too. If an uninsured sub gets hurt on your property, the liability can cascade to you.
What Happens If the Contractor Is Uninsured
If a contractor causes damage to your property and has no insurance, you'll either need to file a claim on your own homeowner's insurance (which may raise your premiums or result in a denial if the work was unpermitted) or pursue the contractor in court. If a worker is injured and the contractor has no workers comp, the injured worker may file a claim against your homeowner's insurance or sue you personally. In some states, you as the homeowner can be held liable as the de facto employer.
The financial exposure from hiring an uninsured contractor can exceed the cost of the entire project. This is why insurance verification is non-negotiable — right alongside license verification. It takes minutes to check and can save you tens of thousands of dollars.
Red Flags Around Insurance
Watch for these warning signs: the contractor says "I'm insured" but can't produce a COI; the COI looks homemade or has inconsistent formatting; the policy dates have expired; the named insured doesn't match the contract; the contractor asks you not to call the insurer; or the coverage limits are suspiciously low. Any of these should pause the conversation until the issue is resolved.
If you encounter a contractor who falsifies insurance documents, report it through our verification system. Fake insurance is fraud, and documenting it protects other homeowners from the same risk.
Next Steps After Insurance Verification
Once you've confirmed active insurance with adequate limits, continue through the rest of the verification checklist. Insurance doesn't guarantee quality work — it guarantees financial protection if something goes wrong. Pair it with a solid written scope, a safe payment schedule, and reference checks to build a complete trust foundation. For a printable version of the full process, visit the Trust Library.
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