The Ultimate Guide to Certificates of Insurance (COIs)

Are you confused or even intimidated by Certificates of Insurance (COIs)? Good news, you’re not alone. Managing COIs is time-consuming and complicated if you don’t have the proper systems in place.

We’ve put together a cheat sheet on everything you need to know about COIs 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 are documents that provide all the important details of an insurance policy, it’s a reliable source of information that can even provide proof of insurance coverage. A COI summarizes the coverage terms, conditions, and duration of the policy at the time of certificate issuance.

The snapshot of the policy on a single document makes it easier for the certificate holder to review and store. Most often, opposite parties in an agreement, contract, or transaction request certificates 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 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

Tracking a certificate of liability insurance will help protect the project owner and extend Additional Insured status to the manager. Collecting and reviewing this type of document is important to transfer the risk from the owner to a third-party vendor. Review the following fields on the COI to ensure 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’s 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 of a claim.

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 enough 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 minimal COI collection and tracking processes at best, and non-existent, at worst. 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?”

To prevent these expensive claims and lawsuits, it’s imperative to implement a COI management process and ensure vendor compliance. Insurance professionals who handle several hundred COIs and other vendor credentials don’t 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, can help manage all aspects of the COI process and reduce the chance of assuming unintended risk.

With our platform, your company can manage COIs and endorsements in one location, automate collection, ensure requirements are met, and end manual data entry. 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.