What is a Certificate of Insurance used for?

A Certificate of Insurance serves as a document that provides verification of insurance coverage held by an individual or business. Specifically, it outlines the types and limits of insurance policies in effect, such as general liability or workers' compensation, and who is covered under those policies. This document is often requested by third parties, such as clients or vendors, to ensure that the insured party has adequate coverage to meet contractual obligations or to protect against liability risks. The Certificate acts as proof of insurance, making it easier for parties to engage in business transactions confidently, knowing that there is a level of financial protection in place.

In contrast, other options do not accurately represent the primary role of a Certificate of Insurance. While some may think it relates to warranties on property or facilitates claims, the Certificate itself does not provide coverage guarantees or affect the claims process directly. Additionally, it is not a tool for calculating insurance premiums, as premium calculations involve underwriting processes based on risk factors rather than documentation like a Certificate.