What is a Certificate of Insurance primarily used for?

A Certificate of Insurance is primarily a document used to provide proof that an individual or business has valid insurance coverage in place. This certificate is typically issued by an insurance company and serves to notify interested parties, such as clients or contractors, that specific types of insurance are active and provide certain coverage.

The primary function of the certificate is to reassure third parties that they will be protected from potential liability or claims under the terms of the insurance policy being referenced. For example, in situations where a contractor is required to show proof of liability insurance before starting work, a Certificate of Insurance can quickly communicate that the contractor has the necessary coverage, thus fulfilling contractual obligations or legal requirements.

While it can include information about coverage limits and types of insurance, its main purpose is not to detail these elements comprehensively, but rather to serve as verification of coverage. Other options, such as serving as a binding contract or managing claims, do not align with the primary purpose and function of a Certificate of Insurance, making them less applicable in this context.