Certificate Of Insurance 101: What Business Owners Need to Know

One of the first priorities for a new business owner is negotiating a lease with the landlord. Regardless of whether a business operates out of an office, store, or showroom, a lease agreement typically obligates a tenant to carry specific limits of insurance. Landlords often request proof before the tenant takes possession of the space. This proof is called a Certificate of Insurance.

Sometimes a landlord’s insurance requirements appear difficult to meet. Forthcoming tenants initially may not realize that the terms of a lease and its required limits of insurance can be negotiated. Most leases minimally request that the tenant carry General Liability limits of $1 million per occurrence and $2 million in the aggregate. Some leases require the tenant to provide for coverage for Improvements and Betterments made to the space.

Once a policy is bound, an agent or broker will provide the insured with documentation naming their landlord as the Certificate Holder. It is very important to understand, however, that the certificate of insurance is only a snapshot of the coverage put in place.

Frequently asked questions from those looking to obtain a Certificate of Insurance include:

• Why all this emphasis on who, what, where, how, and when to get a certificate?
• Who should you provide with a certificate? What should it say?
• How do you know what should be included?
• When can you push back on a landlord asking for unreasonable inclusions?
• Why do landlords request the name of each officer, director, member, agent, representative, and successor that appear on a certificate of insurance?

As new business owners begin to encounter all of this and more, it’d be well worthwhile to call their insurance agent. Contact us today!