Insurance Certificates: Do’s & Don’ts for Small Businesses


Running a small business is challenging enough; the last thing you need to worry about is a lawsuit from a client or an employee. Small business insurance protects its owners from various legal and liability situations, ranging from damaged products to car accidents. Perhaps more importantly, the only way to prove that your company carries small business insurance is by maintaining, and providing copies of your insurance certificates to potential clients as requested.

small business insuranceDo keep your insurance certificates in an easy reachable place. For example, if your company regularly uses a vehicle for travel, keep copies of the current auto insurance certificates in the glove compartment. If one of your drivers is in an accident, you’ll make things a lot easier for the responsible party, any accident victims, not to mention your company, by having that information and proof of insurance on hand and accessible.

Do keep the original copies of your certificates someplace safe in the office. Designate a special folder for the current certificates and archive them once they expire. This is important because some policies issue new certificates each quarter, meaning they change frequently. Ensure all the insurance coverage paper work is up to date to save time when needed.

Don’t hire subcontractors without certificates of insurance. Just as your clients request proof of your insurance, you should request the same of anyone you hire. Your policy won’t cover any mistakes or liability made by an uninsured subcontractor. You could even recommend your own agent to the subcontractor is they don’t have business insurance. They may even offer a referral discount on your next policy renewal.

Don’t limit your insurance coverage to only the major areas of your business. Even if 90 present of your business takes place on a road, and the remaining time is spent with three employees in a two-room office, you still need business property insurance. Protecting every individual facet of your business gives you maximum coverage, and small business insurance protects you if the ceiling lamp randomly falls on an employee’s hand.

Do bundle your insurance coverage. You can streamline the coverage process and reduce your paperwork by buying multiple types of insurance through the same agent. This also makes it easier to keep track of your insurance certificates or request additional copies as necessary. Additionally, many insurance companies offer reduced rates or discounts for customers who purchase multiple types of small business insurance.

Don’t opt for the cheapest coverage. The first few years of running a small business cause many owners to feel financially strapped, and tempted to purchase a cheap insurance policy that offers minimal coverage. The problem is, even if you routinely update your small business insurance policies and keep current certificates, they won’t be of much use if the coverage is poor. For example, if you decided to get the lower coverage option for commercial liability, this can leave your company owing thousands of dollars in deductible fees in the event of an accident. Like health insurance, opting for the cheapest business insurance is all but asking for trouble, especially if your funds are already limited.

Just as you wouldn’t attempt to travel overseas and ask the customs officer to “take your word for it,” that you’re an American citizen, you shouldn’t expect your clients to take equally large leaps of faith. This is why an increasing number of small business owners are including copies of their small business insurance certificates with prepared information packages for their newest clients. Keeping accurate, current certificates of insurance for every area of your business saves you time and potential lost income in damages and legal fees.


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