Important?

What is a Certificate of Insurance and Why is it Important?

Insurance is a common risk transfer method local government can use to minimize a potential financial loss. They pay a premium to the insurer to provide this coverage. A Certificate of Insurance (COI) provides proof that insurance is in place. It is usually a one-page statement summarizing the coverage that is provided by the insurer or broker.

A COI serves a bigger purpose when you are entering into contractual agreements with other parties, such as contractors and service providers. Insurance requirement provisions in contracts and agreements are a very common risk transfer method. They are typically followed by a request for all parties to produce a COI confirming that the coverage is in place and that it meets the requirements of the contract or agreement. We recommend that all local governments include specific insurance language in their contracts and agreements that can be evidenced and confirmed in a COI. Examples include:

Your local government added as an “Additional Insured”

When your local government is added as an additional insured to the contractor’s insurance policy, the coverage is extended to you without having to pay a premium. So, if you receive a claim because of the work of a contractor or service provider, their insurance will provide a defence because you are an additional insured.

Liability insurance for either $2 million, $5 million, or more (depending on the contract)

The level of liability insurance requested is dependent on the work being completed and the level of risk arising from that work. The MIABC’s matrix can assist local governments in identifying the minimum level of insurance you may want to require from contractors that is commensurate with the contract risk.

30 days notice of cancellation

When you request notice of cancellation on the COI it ensures that you are provided with an update if the insurance is cancelled. There are many other types of insurance coverage that you can request to be included in the COI that are more specific to the work or services being provided. If you are unsure what types of insurance you should request, consult the MIABC insurance matrix to obtain some guidance. MIABC members can also contact the MIABC at AskUsAnything@miabc.org for further guidance.

Requesting a COI to confirm that the contractual requirements have been met is very common. The contractor should not incur any additional costs by requesting a COI from their broker or insurer. A new COI can typically be obtained by the contractor within a day or two at most.

Members of the MIABC can take advantage of the new option in the Loss Control Program offering document services for MIABC Certificate of Insurance templates that can be tailored to the needs of individual members. For more information on the MIABC’s programs, contact Sandra Mayo at smayo@miabc.org or AskUsAnything@miabc.org.

SANDRA MAYO

is the Risk Control Specialist at MIABC. Sandra is part of the Member Services Team, focusing on the newly launched Loss Control Program to meet the evolving needs of members. Until recently, Sandra managed risk and insurance at the City of Coquitlam and, prior to that, managed risk and insurance at the YMCA of Greater Vancouver.