The Ultimate Guide to Certificates of Insurance in Canada

By Arthur Dubois | Published on 06 Jul 2023

a person typing on a laptop

As a business owner in Canada, you know how important it is to protect your enterprise from potential risks and liabilities. A certificate of insurance (COI) provides proof of insurance coverage for services or goods offered or used. In this article, we’ll cover the essentials of COIs so you can make informed decisions.

Understanding Certificates of Insurance

As a business owner, you need to protect yourself, your employees, and your assets from potential liabilities. One way to do this is by purchasing business insurance policies that cover risks related to your business. However, having insurance coverage is not enough; you must prove it. That’s where Certificates of Insurance (COIs) come in.

What is a Certificate of Insurance?

A COI is a document that proves that you, as a business owner, have insurance coverage. It provides evidence that your business has purchased and maintained insurance policies that cover risks related to your business. COIs typically include details about your insurance policy, including the types of coverage, limits, and duration of the insurance policy.

COIs are not insurance policies; they are evidence that you have insurance coverage. Clients, partners, and contractors often require your COI before they agree to do business with you. For example, if you’re a contractor working on a construction site, the property owner may require you to provide a COI to demonstrate that you have liability insurance coverage. Providing proof of insurance assures the property owner that if any damages or injuries occur, your insurance will cover them.

The Purpose of Certificates of Insurance

The primary purpose of COIs is to provide proof of insurance to interested parties. They help to establish trust and confidence between parties involved in business transactions. COIs offer a quick and easy way to confirm that a business has the necessary insurance coverage to protect against potential liabilities.

COIs are not just for business owners; they are also important for individuals. If you rent a car, for example, you may be required to provide a COI to show you have car insurance coverage. Proving you have insurance coverage assures the rental car company that if any damages occur, your insurance will cover them.

Key Components of a Certificate of Insurance

COIs include essential components that you should pay close attention to. These include:

  1. Name and address: The certificate typically includes the policyholder’s name, address, and contact information.
  2. Policy number: The policy number is unique to your insurance policy and identifies the coverage in the certificate.
  3. Insurance company: The certificate typically lists the name and contact information of the insurance company that issued the policy.
  4. Effective and expiration dates: COIs include the effective and expiration dates of the policy.
  5. Type and amount of coverage: The certificate typically shows the types and amounts of coverage included in your policy.

It’s important to review your COI carefully to ensure that it accurately reflects your insurance coverage. If you notice any discrepancies, contact your insurance company immediately to correct them.

Overall, COIs are essential tools for business owners and individuals. They provide proof of insurance coverage and establish trust between parties involved in business transactions. If you are a business owner, ensure you have a COI for each insurance policy. If you are an individual, ensure you have the COIs to protect yourself and your assets.

What Types of Businesses Need a Certificate of Insurance in Canada?

Any business that provides goods or services should be able to provide a certificate of insurance. However, companies that provide labour usually must provide the client with proof of insurance. Your COI will assure the client that the contractor has insurance to cover the claim if an injury or damage occurs.

Many large corporations and governments of all levels require vendors to provide a certificate of insurance as part of the hiring process. If, for example, you are hired by the government of Canada, you must show you have commercial general liability insurance and any other insurances that are relevant to the job. 

The COI for government contracts outlines the specifics of the types of insurance and the minimum amount of coverage you must have. Coverage depends on the kind of services your business provides. If, for example, you require a contractor’s pollution liability, the minimum limit of your policy must be at least $1,000,000 per incident and occurrence in the aggregate.

Types of Certificates of Insurance in Canada

Insurance is a crucial part of any business, offering financial protection against unexpected events that could cause significant harm to your company. Many insurance policies in Canada are designed to protect your business from specific risks and liabilities. Here, we will explore the most common types of certificates of insurance in Canada and what they cover.

Commercial General Liability Insurance

Commercial general liability insurance (CGL) is one of the most common types of insurance policies for businesses in Canada. It protects businesses from claims related to property damage or personal injury that occur on the business’s property. It can also protect the business from claims arising from advertising injury. Commercial general liability insurance covers expenses associated with damages, legal defence, and settlements. Most companies require CGL insurance from contractors and vendors before conducting business.

For example, if a customer slips and falls in your store, CGL insurance can help cover their medical expenses and any legal fees associated with the incident.

Professional Liability Insurance

Professional liability insurance, also called errors and omissions (E&O) insurance, protects professionals like doctors, lawyers, accountants, and consultants from legal claims arising from errors or omissions during their work. This policy covers legal fees, settlements, and damages in cases where your negligence or mistakes led to a client’s financial loss.

For example, if you are a consultant and provide advice that results in financial loss for your client, professional liability insurance can help cover the cost of any legal claims that arise from the incident.

Cyber Insurance

Most businesses rely on technology to help run their operations, while others provide technology services. Cyber attacks on businesses are becoming increasingly common, so cyber insurance is a significant need. These attacks can compromise your ability to function as a business and cause harm to your clients.

Cyber insurance can offer first-party coverage and third-party coverage. First-party coverage protects you, the business owner. It covers data breaches, extortion, legal costs, credit monitoring, reputation management, etc.

Third-party coverage provides insurance to cover costs from lawsuits, government fines, settlements, damages, credit monitoring for your clients, etc.

Due to the number of cyber-attacks and data breaches, showing your customers your COI confirming you have cyber insurance can give them peace of mind if your systems are compromised.

Commercial property Insurance

Commercial property insurance covers damage to your property and assets from natural disasters like fires, floods, and earthquakes. This policy allows you to add coverage for theft and other criminal acts.

For example, if your business is located in an area prone to flooding and your equipment is damaged in a flood, property insurance can help cover the cost of repairing or replacing the damaged equipment.

Business Interruption Insurance

Business interruption insurance (BII) covers financial losses resulting from events that temporarily cause your business to close. This policy covers lost profits and operating expenses while your business suspends operations due to emergencies like fires, floods, or vandalism.

For example, if you must close your business due to a fire, BII insurance can help cover the cost of lost profits and operating expenses while your business is closed.

Auto Insurance

Auto insurance covers damages from collisions and other accidents involving your business vehicles. This policy can cover medical expenses, liability, and property damage while using your company vehicles.

Suppose one of your employees is involved in a car accident while driving a company vehicle. Commercial auto insurance can help cover the cost of any damages or injuries that result from the accident.

It is essential to assess the risks and liabilities associated with your business and determine which insurance policies are necessary to protect your company. Investing in the right insurance policies protects your business from unexpected events that could cause significant financial harm.

How to Obtain a Certificate of Insurance

Choosing the Right Insurance Provider

Before obtaining a COI, you must find the right insurance provider. Finding the best insurer for you can be daunting, but you can do a few things to make the process easier. 

Start by identifying the types of insurance coverage that your business needs. Your insurance needs for your business might include general liability, property, and workers’ compensation insurance, among others. Seek out providers that offer multiple types of insurance, which can give you a bundled package discount. Research each provider’s financial strength and reputation to ensure they are a reliable and trustworthy company.

When choosing an insurance provider, it’s also important to consider their customer service and support. Look for a provider that offers excellent customer service and is responsive to your needs. An insurer that offers outstanding customer service can be especially important in the event of a claim, where you will need support and guidance from your insurance provider.

Assessing Your Business’s Insurance Needs

After selecting an insurance provider, the next step is to assess your business’s unique insurance needs. Every business is different, and the risks and liabilities that your business may face will depend on various factors, such as the industry you operate in and the size of your business.

It is essential to identify the risks and liabilities your business may face and determine the coverage needed to mitigate them. Consult an insurance provider to help you choose the right coverage for your business. They can help you understand the different types of insurance available and recommend coverage options tailored to your specific needs.

The Application Process

Once you’ve determined your business insurance requirements, you can begin comparing business insurance online. Applying for coverage typically involves providing your insurance provider with accurate information, such as your business’s financial records and operational history. Your provider will use this information to determine the types and amounts of insurance coverage you need.

It’s essential to be thorough and accurate when providing information to your insurance provider. Accurate information will help ensure that you receive the right coverage and that your claims are processed smoothly in the event of an incident.

Renewing and Updating Your Certificate of Insurance

COIs expire, so it is essential to keep your insurance policy up-to-date. Review your policy each year to ensure you have the suitable types and amounts of coverage. Your insurance provider can help you determine if any updates are needed based on your business or industry changes.

Be sure to provide new COIs to clients, suppliers, or contractors when requested. Providing updated COIs will help you comply with any contractual requirements and ensure that your business is protected in the event of an incident.

By following these steps, you can obtain a certificate of insurance that provides the right coverage for your business’s unique needs. Remember to work with a reputable insurance provider and keep your policy up-to-date to protect your business.

The Bottom Line

Obtaining a COI is essential for managing risk and liabilities for your business. Understanding the different types of insurance policies available and choosing the right insurance provider is crucial to running a business in Canada. Keeping your insurance policy updated and providing clients with proper documentation ensures your business is secure, successful, and protected from potential legal liabilities.

Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications