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What is a Certificate of Insurance – ACORD 25?

What Is a Certificate of Insurance?

A Certificate of Insurance provides evidence of insurance showing coverage limits, insurance company details, and expiration dates of policies.  It is a simple method for offering proof to a third-party who has requested it that you carry commercial insurance. Its purpose is for notification only.

The industry standard summarizing these details is known as an ACORD form 25 certificate.

In the 1970s, the Association for Cooperative Operations Research and Development (ACORD) was formed by insurance companies in an effort to minimize confusion and unify insurance policy forms.

What Does an ACORD Certificate of Insurance Cover?

A certificate of insurance ACORD 25 form covers essential information about your business insurance policy, such as:

  • Policy number
  • Types of insurance coverage
  • Issuing insurance company
  • Insurance limits
  • Named insured
  • Policy effective date
  • Policy expiration date

Why Do I Need an ACORD Certificate of Insurance?

There are a few reasons why business owners may be asked to provide an ACORD certificate of liability insurance. Every company you hire or partner with should have their business insurance protection. The ACORD certificate serves as proof that a business has the type of insurance coverage to protect against claims of:

  1. Property damage –  If a vendor or sub-contractor you hired to do work for you causes damage to a client’s property, you may have to pay for repairs.
  2. Personal injury – If one of your employees causes bodily injury to someone else on a job site, you may be held liable.
  3. Substandard work – If your company fails to deliver the work product agreed to in the contract, you can be sued for additional costs to fix the errors.

All business owners want to feel confident that they won’t be held liable for mistakes caused by third parties. Companies or contractors who work for you should be able to provide proof of liability insurance coverage before any work begins.

What is an Insurance Policy?

Your insurance policy is the actual contract between you (or your business) and the insurance company. In simple terms, it is a promise between you and the insurer. The contract states that in exchange for the required premium, the insurer will pay for any covered claim up to the limit stated in the policy.

Certainly, there is more to it than a promise to pay. Your policy provides all the terms and conditions that are related to their promise.

Think of it this way: Your insurance policy is a reference book, and the certificate of insurance is the cliff-notes.

Questions Regarding ACORD forms or Insurance Policies?

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