Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 6 minutes
If you own a business, you know how important it is to have business insurance. You may need proof of insurance when a landlord, client, lender, platform, or public agency asks for it. The exact requirement depends on the contract, business activity, and location.” Business insurance and licensing requirements vary by business activity and jurisdiction.
Some businesses are legally required to carry certain insurance, while others buy coverage because a lease, client, or contract requires it. If your business owns or regularly uses vehicles for work, commercial auto coverage is usually appropriate because personal auto insurance usually does not cover work use. Clients and customers may require you to have insurance before they agree to work with you. You might even have to carry insurance before you can bid on a project.
As a business, having proof of insurance on hand is important. One of the most reliable and trustworthy forms of proof of insurance is the ACORD certificate. Your agent, broker, or another authorized representative can issue a certificate when proof of coverage is needed. Here’s what you need to know about the ACORD certificate of insurance.
What is a certificate of insurance?
An ACORD 25 is a one-page document that summarizes your insurance coverage. ACORD 25 certificates can provide proof of many different types of commercial insurance coverage, such as general liability insurance, professional liability, workers’ compensation, commercial auto insurance, and others. ACORD 27 and ACORD 28 are used for property-related evidence of insurance for parties with a financial interest in covered property. If a client, landlord, lender, or public agency asks for proof of insurance, ask which form they need and whether endorsements must accompany it.
History of the ACORD certificate
ACORD stands for the Association for Cooperative Operations Research and Development, which is an international nonprofit organization created in 1970. The group formed in response to what was, at the time, a confusing situation in the insurance industry.
Back in the 1960s, every insurance company had its own process for creating and issuing documentation and insurance forms. Because there was no industry standard, customers, clients, and even insurance agents struggled to make sense of the various policies. There needed to be unified documentation to simplify insurance.
The companies that founded ACORD agreed that this organization could develop standard forms for use by all insurers. At that point, the ACORD certificate of insurance was created to unify the industry.
Today, when you need proof of coverage, the ACORD certificate is the quickest and easiest way to provide that proof. Not to mention, it’s the most recognized and trusted. ACORD provides insurance documentation in 100 countries and works with more than 36,000 organizations.
Information included on an ACORD insurance certificate
The ACORD 25 Certificate of Liability Insurance states that the coverages shown are subject to all terms, exclusions, and conditions of the actual insurance policies. This makes it easy to determine what types of insurance you have, how much coverage you have, and more. An ACORD certificate of insurance usually includes the following information:
- Your company’s name and contact information. That includes your business name, complete address, phone number, email, and fax number, if available.
- Your insurance company’s information. The ACORD certificate lists your insurance company’s name and physical address, as well as the name and contact information for your agent, if you have one.
- What kind of insurance you have. An ACORD certificate specifies the types of insurance coverage you have, such as general liability or professional liability, commercial auto, or workers’ compensation insurance. A Certificate of Liability Insurance may indicate additional insured status or a waiver of subrogation, and the remarks section may include related wording. However, these rights are only valid if they are provided by the underlying policy and its endorsements. The certificate itself does not create or modify coverage.
- Your policy number. You can find your policy number on an ACORD certificate, which is important to know if you ever need to file a claim.
- The coverage period. Anyone who reviews your ACORD certificate of insurance can see when your current coverage begins and ends. Third parties who request proof of insurance will want to make sure your policy is active.
- The coverage limits. Your ACORD certificate contains your coverage limits. This is the maximum amount of money your insurance company will pay for a covered claim. It may also include any other limitations that apply under your policy. This can be important information that proves you have sufficient coverage to meet the needs of a typical business like yours.
- Deductible. The ACORD 25 Certificate of Liability Insurance may show a DED/RETENTION amount under the umbrella or excess liability section. This reflects the self-insured retention or deductible that applies before the umbrella or excess coverage responds.
How can I get an ACORD certificate of insurance?
After you buy a business insurance policy, you get an ACORD certificate. If you didn’t get a certificate or if you’ve misplaced it, don’t panic. Today, most insurance companies have an online portal that customers can access to pay their premiums, file a claim, and get other important information about their coverage.
If you have digital access to your account, many insurance companies allow policyholders to download an ACORD certificate of insurance whenever they need one. Of course, you can also contact your insurance agent or the insurance company if you can’t get a digital ACORD certificate of insurance online, or lose your original copy.
Why is an ACORD certificate important?
There are many reasons you may need an ACORD certificate of insurance.
If you are signing a lease to rent space for your business, the landlord may require you to have general liability insurance. A potential client may ask for proof of liability insurance before they sign a contract with your business. You may even choose to include your ACORD certificate as part of your project proposal to show the prospective customer or client you are a financially responsible and established business.
As a business owner, you should also consider asking for an ACORD certificate when you purchase services or partner with other companies. For example, the next time you hire a vendor or subcontractor, ask to see their insurance certificates. Review the named insured, carrier, policy dates, limits, certificate holder, operations description, and any required endorsements. If the contract requires additional insured status or cancellation notice, confirm the policy and endorsements support it. Certificates do not create extra rights beyond the policy.
What happens if a certificate is not ACORD-approved?
Some forms of proof of insurance are not ACORD-approved. When clients or prospective customers ask for proof of coverage, many will accept something other than an ACORD certificate. For example, they may be satisfied with a statement on letterhead from your insurance company that includes your coverage limits and policy number.
However, ACORD certificates of insurance are the industry standard. They are clearly identified with the widely recognized ACORD logo, which is trusted and accepted throughout the U.S. and around the world.
Bottom line
An ACORD certificate is a useful, standardized way to show that insurance is in place. But it is evidence only, not the policy itself. For anything tied to a lease, jobsite, client agreement, or vendor contract, compare the certificate to the written insurance requirements and confirm whether endorsements are required. If you are unsure what to send or request, review the requirement with a licensed commercial insurance professional before work starts.
