A certificate of insurance is a document provided by your insurance company to an interested third party, like a landlord, contractor, lender, mortgagor, etc. who may have an insurable interest in your property or your actions, including negligence on your part.
The document guarantees to the third party that the insurance company is providing you a specific form of insurance coverage up to a specific limit of liability for a specific length of time. It further guarantees to the third party that if the insurance is altered or canceled, they will receive an advance written notice (typically at least ten days).
Of course, none of this does you a bit of good if you aren't carrying the requested insurance coverage, because some major corporations routinely require professional liability policies in the $10 million limit range or more. This is virtually unavailable at any price to the small shop. Luckily, it's all negotiable, because they're just trying to use your certificate of insurance to limit their own exposure for damages, and thus reduce their own costs. It all boils down to precisely what insurance they are requesting, and what insurance is actually a "deal-breaker" on their part. Negotiate. Negotiate. Negotiate.
Whatever you do, don't be lulled into a sense of security with a personal umbrella policy, thinking that it offers any protection at all for any sort of business pursuit. It does not. Zero. While valuable, it simply provides increased limits of liability for personal policies like auto, boat, home, etc. And even then, it's subject to specified named perils, so you must read it carefully. Yes, all the fine print.
Best regards,
Bob Zale
PowerBASIC Inc.
