5 min read
ACORD insurance cover image

What is an ACORD Certificate of Insurance?

If you’re a business owner, then you’ve probably had to request a certificate of insurance (COI) at one point or another. A COI is basically a document that proves that you have insurance coverage.

You usually need to get one when a potential business partner or client wants to know that you are insured before doing business with you. The COI provides a snapshot of your coverage, listing information such as limits, policy terms, carrier name, and so on.

A COI will let potential business partners know that you have purchased insurance to protect yourself from a variety of potential accidents and mishaps that could occur during your day-to-day business activities.

But what is an ACORD certificate of insurance? You’ve probably heard the term many times. Let’s find out what it means and why it’s important.

ACORD COI definition illustration

What is ACORD?

Many people wrongly assume that ACORD is a type of insurance or a company that sells insurance. It’s actually neither.

The Association for Cooperative Operations Research and Development (ACORD) is an international nonprofit organization that was created in the 1970s by a group of companies that believed that the insurance business needed a way of standardizing forms. Before standardized forms were agreed on, every insurer had their own policy forms, which made life confusing for agents, brokers, and anyone who purchased business insurance.

ACORD was then authorized to create forms that everyone in the insurance industry would use in order to introduce standardization and make everything less chaotic. That’s how the ACORD certificate of insurance was born.

The organization developed industry standards for data acquisition and use that have become industry standards adopted by hundreds of insurers from all around the globe, including almost 90% of property and casualty insurers in the U.S.

And while ACORD does have other projects, it is most well known for the development and distribution of reusable insurance industry forms. If a document meets ACORD’s standards, you’ll see “ACORD” stamped on the top left corner of the document.

The most popular and commonly requested COI is the ACORD 25, which provides evidence of liability insurance, such as general liability, workers compensation, professional liability, and more.

COI illustration

Does Every COI Need to Be ACORD Approved?

The document you submit as proof of insurance does not need to be ACORD approved in order to be accepted, but if you can get an ACORD COI, you probably should. ACORD certificates are secure, internationally recognized, and used by just about every insurance company in the country, so there are literally no reasons why you wouldn’t want to have an ACORD COI.

ACORD documents ensure standardization, meaning that businesses are getting the same document and the same information from their insurers, no matter what carrier sold them their coverage.

ACORD COIs are also faster to validate, always up-to-date, and very quick to process. The ACORD stamp is a symbol that can be trusted in the insurance industry.

When insurance carriers use standard ACORD forms, accuracy increases and ambiguity decreases. To put it this way, if your insurance company is not issuing ACORD certificates and documents, it might be a warning sign that should prompt you to perhaps think about switching carriers.

If your insurer is issuing ACORD documents, you can be sure that the company is secure and compliant with all of the latest industry standards.

ACORD benefits illustration

Additional Benefits of ACORD Certificates

The standardization that goes into ACORD certificates is quite impressive, which is why using them increases efficiency and accuracy between carriers and business partners.

They are also available in a variety of formats. Whether you prefer printable documents, e-forms, or PDFs, ACORD forms are available in all of these formats.

If you’re collecting data from clients, ACORD allows you to get the same, standardized forms from everyone, reducing confusion for everyone involved.

ACORD certificates are also categorized impeccably by number, making it very easy to manage the types of forms you need to send and receive. Some of the most popular forms used in the insurance industry are the following:

  • Certificate of Liability Insurance (25)
  • Evidence of Property (27)
  • Commercial Insurance Application (125)
  • Commercial General Liability Section (126)
  • Business Auto Section (127)
  • Workers Compensation (130)
  • Commercial Auto (137)

Who you need a COI illustration

Why Are Certificates of Insurance Necessary?

Certificates of insurance offer businesses peace of mind and legal security. If your business wants to work with a new vendor or contractor, you should be asking them to provide you with a COI. If they don’t respond or do not want to send you one, that probably means that they are not properly insured since most insurance agents will send ACORD COIs free of charge.

As a business owner, you want to do everything you can to limit your chances of being sued, especially if you want to avoid claims related to something for which your partner or vendor is responsible.

If you’re going to hire or cooperate with another company in any way, make sure that they have their own liability insurance coverage. Obviously, the best way to do that is to ask them to send you an ACORD certificate of insurance.

It’s also important to reciprocate when you are being asked for a COI by a business that wants to work with you. Responding to such a request by quickly providing a standard ACORD certificate to them shows that your business is financially responsible and fully insured.

If your business is able to provide a COI quickly, you’re most likely going to get the job over a business that is either slow to respond or refuses to provide proof of insurance.

At Embroker, we understand how vital COIs are to your business’s day-to-day activities, which is why we have made it easy for businesses to create and obtain digital certificates of insurance almost instantly through our platform, without having to involve their brokers in the process.

If you need more information about certificates of insurance or have any other general business insurance questions, feel free to reach out to our team at any time.