The Ultimate Guide to Certificates of Insurance (COIs)
Are you confused – possibly even intimidated – by Certificates of Insurance? Good news: you’re not alone. Managing certificates of Insurance can be notoriously time-consuming and complicated.
So, we’ve put together a cheat sheet on everything you need to know about certificates of insurance to ensure vendor compliance and remain protected. This guide will take you from zero to COI hero in no time.
What is a Certificate of Insurance (COI)?
Certificates of insurance (COIs) are documents that provide all the important details of an insurance policy, it is essentially a reliable source of information or proof of insurance coverage. A COI summarizes the coverage terms, conditions and durations of the policy at the time the certificate was issued.
The snapshot of the policy on a single document is easier for the certificate holder to review and store. Certificates are usually requested by opposite parties in an agreement, contract, transaction to make certain the other party has the appropriate coverage, reduce exposure to risk and protect against third-party liability.
Types of Certificates of Insurance
A majority of insurance companies or brokers will provide COIs based upon the standard ACORD 25 form. The ACORD 25 is the basic certificate used to represent any of the five types of insurance policies. These forms provide information about the coverage, such as:
- Policyholder’s Name
- Policy Effective Date
- Type of Coverage
- Policy Limits
- Special Insurance Requirements
A certificate of liability insurance should be tracked to protect the project owner and extend Additional Insured status to the manager. Collecting and reviewing this type of document is important in order to transfer the risk from the owner to a third-party vendor. Review the following fields on the COI to ensure that your third parties’ coverage is correct:
- Additional Insured status extended to the right entity names
- Waiver of Subrogation
- Coverage is “Primary and Non-Contributory”
- Description of what the vendor is working on
How to Review a Certificate Like a Pro
It is critical to review all COIs provided to you by your insured for accuracy and conformance to the specified insurance requirements. This initial review can minimize the potential of disputes, in the event a claim is filed.
Here are some important areas to check on when reviewing the COI:
- The insured is using the proper form for the COI, like the ACORD 25
- The company name on the COI is the same as the one listed on your contract
- Your company is named as the COI holder
- The policy has been issued by a trustworthy insurer with good financial ratings
- The types and limits of insurance listed are the same or more than what is required under the contract
- The policy numbers should be listed
- The dates on the coverage are sufficient for the required work (make sure if the policy expires during this time range to request a new COI before the other expires)
- The “Notice of Cancellation” is acceptable
- All specific insurance requirements are implemented
COI Tracking & Management
Many companies have shabby COI collection and tracking processes at best, and non-existent, at worst. In fact, between 36% to 53% of small businesses are involved in at least one litigation in a given year, and 90% of all businesses are engaged in litigation at a given time, which begs the question “Why?”
In order to prevent these costly claims and lawsuits, it’s imperative to implement a COI management process and ensure vendor compliance. Insurance professionals who are handling several hundred certificates of insurance and other vendor credentials do not have the bandwidth to maintain compliance standards, track expiration dates, and still complete their other job duties.
That’s where technology comes in. Certificate of insurance tracking solutions, like SmartCompliance, are able to help manage all aspects of the COI process and reduce the chance of assuming unintended risk.
With our platform, your company will be able to manage COIs and endorsements in one location, automate collection, ensure requirements are met, and eliminate manual data entry. Easily upload, organize, and search endorsements or COIs to guarantee insureds are compliant and ensure subrogation coverage for your company. Request a free demo today to get started