How to Check If a Business Has Insurance

November 10, 2023
how to check if a business has insurance

If you’ve been around the block in business, you know how important it is to have business insurance to cover you in looming and possibly costly situations. 

However, do you know how important it is to ensure that your partners have insurance? Do you know how to go about proving that your hires and partners have adequate coverage? 

Follow along in this blog to discover the answers to those questions, as well as how to check if a business or vendor has insurance. Or, learn to navigate the realm of COIs with confidence with our latest guide: Certificate of Insurance 101.

What Does It Mean When a Contractor Says They Are Insured?

When a contractor says that they’re insured, we’d obviously like for it to be true. However, contractors can always say that they are insured when it’s not the case. It is your due diligence as a hiring party to make absolutely certain that the vendors and third-party service providers that you work with are, indeed, carrying the insurance coverage that they say they are. Furthermore, their coverage details should be compliant with your contractual obligations, vendor requirements, and state and industry-prescribed regulations.

For example, suppose you need a contractor who has general liability insurance. Not only will you want to verify the facts of their coverage with a certificate of insurance, you will also want to understand exactly what their general liability insurance covers. Insurance policies can vary from case to case and liability coverage is no different. When you need to verify a contractor’s insurance, reach out to them, their insurance agent, or their insurance company for a COI.

How Do You Verify a Company Is Insured?

In order to verify that a company carries proper insurance, a similar logic follows that you can’t just ask them and trust the answer that they give. The formal process for insurance verification involves important documents called certificates of insurance, or COIs.

How Do You Verify a Company Is Insured

A certificate of insurance is a special insurance document that provides official evidence and a summary of an insurance policy on the date it was issued. They are official legal documents that can only be produced by the insurance provider of the policy in question. To obtain one from a company you’d like to verify the coverage of, you must send them an official request.

How Do You Ask A Contractor If They Are Insured by an Insurance Company?

To receive a contractor’s proof of insurance, just as you would a company’s, you should send them an official COI request. A COI request can come in multiple forms, be it email, letter, or verbal instruction; however, we recommend using a written format to keep documentation for your records.

Follow these steps to receive a contractor’s evidence of insurance with a COI:

  1. Lay out your requirements and communicate them clearly to your vendor. First, you’ll inform the contractor that you need a certificate of insurance from them as part of your contractual agreement. Specify the kind of coverage you need proof of and the minimum coverage types and policy limits that are acceptable. Be sure to provide them with your contact information as well so that they can list you as the certificate holder. Finally, inform them if you require that they add you as an additional insured on their policy or any other endorsements or requirements you have.
  2. Be patient as they work with their insurance provider to generate the COI. Part of the insurance certificate requesting process lies with the contractor, who has to go to their insurer in person or online, provide the requirements that you gave them, and request the document. The insurer will make sure that the coverage aligns with your needs or make changes to the policy so that it does. They will then generate the certificate and will typically get it back to you within a few business days.
  3. Receive the COI and verify that their coverage meets your requirements. Once you receive a contractor’s COI, review it to ensure that it meets your laid-out requirements. Confirm that all details are correct (especially the name of the vendor and your own certificate holder details) and that the coverage types, policy limits, and effective dates align with the level of risk associated with the project or services being provided. 

How Can You Tell If a Business Has Insurance Online?

Businesses sometimes wonder if it’s possible to tell if another company has insurance online. It is not currently possible to do so. While you can often verify your own insurance coverage online, such as by checking the status of your insurance, driver’s license, or vehicle registration through your state’s DMV portal, there is no easy way to verify the insurance of other individuals or businesses.

How Can You Tell If a Business Has Insurance Online

You can read more about business certificates of insurance here.

Is There an Insurance Database?

Further, there is currently no standing database of insurance coverage or ability for insurance policy lookup in the U.S. This is probably because of how many insurance providers there are, as well as the potential for virtual security breaches or hacking. Thus, the COI requesting process, as it stands, is the standard method for insurance verification for those doing business today.

How myCOI Can Help Track 3rd Party Insurance Coverage

Have more questions about the importance or mechanics of insurance verification? Want to know how you can ensure your business’s compliance when it comes to your hired contractors, vendors, and business partners? myCOI is the COI management tool for you. Backed by a team of industry experts, we’re here for you when it comes to COI and compliance tracking. Book a demo today to learn more.

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