What is one of the main purposes of issuing a certificate of insurance?

One of the main purposes of issuing a certificate of insurance is to serve as proof of coverage. This document is often provided by an insurance company to indicate that an individual or business has a specified type of insurance coverage in place. It typically outlines the types of coverage, the limits of the insurance, and the parties that are covered.

Certificates of insurance are commonly used in various business transactions to assure other parties, such as clients, vendors, or landlords, that the necessary insurance protection is active and valid. This assurance helps to facilitate business operations and may be required in contracts to reduce risks associated with potential liability claims or damages. The certificate operates as a verification that the insured party has met their obligations regarding insurance, thus providing a level of security and trust in business relationships.

In contrast, increasing premium costs, requiring additional documentation, or establishing a direct relationship with the insurer are not primary purposes of a certificate of insurance and do not directly relate to the fundamental function of providing evidence of coverage.