How to read a certificate of insurance

By Nathaniel Dalby on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Insurance documentation can be a bit of a labyrinth – you sign up to a policy and suddenly you’re inundated with letters, leaflets and documents. But while your policy documents are important, it’s easy to ignore the certificates. 

In this article, we’ll explore the differences between policy documents and certificates, how to read them and why you should display them. 

What is a certificate of insurance? 

Simply put, a certificate of insurance is a document which proves your insurance status and briefly outlines what you’re covered for. While they’ve traditionally been physical documents, you should now receive a digital version as well. 

This is different from policy documentation, which outlines your coverage in more detail. Instead, a certificate is proof that you have the policy at a glance, so don’t expect much more than an outline of your insurance. 

Main components of insurance certificates 

When you receive your insurance certificate (either via post or email), it will generally include the following: 

• Your name 

• The insurance provider’s name 

• Policy number and type of policy 

• Coverage limits – this is the maximum you’ll be paid if you make a claim 

• The start and finish date of your cover 

• Inclusions and exclusions – remember, this will only be a brief outline. Check your policy documents for the full list 

Types of insurance where proof is required 

While it’s helpful to have your insurance certificates with you regardless of the policy you hold, there are some insurance types which businesses are typically required to provide proof for. Here are some examples: 

• Professional indemnity insurance – This provides businesses protection from financial losses sustained while providing a service, including legal costs and damages. This includes negligence, breach of contract, intellectual property infringement and defamation. 

• Public liability insurance – This is a common type of insurance for those working directly with the public, such as restaurants, event organisers and retail shops. It covers liability claims in the event of injuries or damages. 

• Employers’ liability insurance – This is compulsory under UK law if your business has employees. It protects against compensation claims arising from illness or injury. 

• Product liability insurance – This protects against claims in the event of injury or personal damage from a product fault, and is common among designers, manufacturers and distributors.  

See also: Do you need public liability insurance for your business? – Not sure if you need public liability insurance for your business? Here’s why you may need it and what event insurance is available

Why are insurance certificates important for small businesses? 

Having physical proof of your insurance policy may seem redundant in a world where you can simply open an app and get your policy up in seconds. However, there are some advantages that insurance certificates have for small businesses that can be easy to take for granted.  

Client and customer trust 

No matter what industry you’re in, being able to quickly show that you’re fully insured can do wonders for the trust between you and your customers and clients. Having your certificate at hand at your place of business shows that you’re fully prepared and serious as a business owner.  

This could be even more important for a sole trader or someone who’s just starting out in business, as you may have more one-to-one clients who will be looking for an increased level of trust compared to someone just visiting a shop, for example. 

Keep track of your policy 

Keeping your insurance certificate somewhere you’ll always notice it means you’ll be sure when your policy ends or renews. It’s easy to forget about an insurance policy (especially if it’s not the only one you have) and let it renew when you could have bagged a better deal elsewhere or worse, expire, leaving you without cover. 

Fulfilment of legal obligations 

There are some cases where the law dictates that you must display a proof of insurance. For example, if you employ staff in your business, you’re legally obligated to be covered by employers’ liability insurance, which must be displayed where employees can see it.  

Conclusion 

There’s no such thing as being too careful when it comes to insurance. Whatever the industry you’re in or the policy you have, it can’t hurt to keep your insurance certificate ready for when you need it. 

Read more

Business insurance: Everything you need to know – Insurance offers vital protection from the crippling costs of a claim against your business. But which insurance do you actually need and which is merely optional?

Small business insurance: What to look for in a policy – In this piece, we look at the variety of business insurance cover you should consider in your small company

Dealing with business insurance claims – SmallBusiness.co.uk provides some points to help you if you need to make an insurance claim

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