A certificate of liability insurance is a document that proves your tech company carries insurance. After you purchase a policy, you can usually download your certificate online.
Your client may require a certificate of insurance in a contract to protect against potential damages caused by your business.
Example: A computer repair business signs a one-year contract to repair and maintain the computers at a university. The university requires the business to secure a general liability insurance policy to protect against accidents that damage computers or cause injuries.
Small tech companies that rent an office or other commercial space may see a request for a general liability insurance certificate in the lease terms.
Example: A small IT training company rents an office in a commercial complex. The landlord requests that the company provide an insurance certificate to prove it carries general liability insurance.
The policy protects the business and the landlord in case a visitor to the office slips and sues over an injury.
A certificate of insurance assures your clients that your business is trustworthy. It also makes clients more likely to work with you, as they know that any damages or losses from an accident or mistake will be covered by insurance.
Example: A small IT consulting company purchases errors and omissions insurance (E&O) to attract new clients and protect against claims of professional negligence. Having this coverage wins the company another big client because another consulting business was uninsured.
Liability insurance can protect a tech company from lawsuits over damage to someone else's property. However, it can't help pay to repair or replace your own business property that is damaged, destroyed, or stolen.
Commercial property insurance protects your own business property. You can often bundle it with general liability insurance in a business owner's policy (BOP) at a lower cost than purchasing each policy separately.
Example: A thief breaks into an IT staffing agency and steals $3,000 worth of computers and other equipment. The agency's BOP helps cover the cost of replacing the stolen items.
Liability insurance protects against lawsuits over injuries, but it won't cover medical costs if an employee is injured on the job.
Workers' compensation insurance covers medical bills and partial lost wages when an employee is injured or develops an occupational illness at your tech company. (The employer's liability insurance that's typically included in workers' comp does cover lawsuits related to an employee injury, as well.)
Example: After years of coding, a software developer at a small tech company is diagnosed with carpal tunnel syndrome. The company's workers' compensation policy pays for the resulting medical bills.
The Association for Cooperative Operations Research and Development (ACORD), a nonprofit property and casualty insurance organization, provides the certificate of insurance form used by most insurance companies, agents, and brokers. It includes the date the certificate was issued, who issued it, who it covers, the type of insurance, and the policy limits, among other information.
If you receive a form from a vendor or subcontractor, check it over to ensure:
View a sample ACORD 25 form: certificate of liability insurance.
Your certificate of insurance is a summary of your own coverage; it does not protect your clients. If you wish to include a client or customer on the policy, you can add them as an additional insured. Contact your agent or broker and ask them to change your policy to include any additional individuals or businesses that you want to cover.