Certificate of Insurances (COIs) are a requirement anytime a third party enters your property or premises to perform a task outside of your control. It’s important that your business requires this certificate because hiring an uninsured business to perform work for you can lead to big consequences. This document assures those you do business with that you have insurance. In order to fully explain what COIs are and when they are a requirement, we’ve compiled answers to some of the most common questions about them.
Why are Certificates of Insurance necessary?
Certificates of Insurance provide proof of insurance, quick access to a policy and liability reduction. Additionally, they provide an extra layer of protection to save your company from lawsuits, lost revenue and worry.
What types of businesses require COIs?
Any business that you hire or other business that you allow to operate on your property require them. If they use your resources and equipment, or if they hire another third party to do a job, you can request a Certificate of Insurance.
What are three types of coverages found on COIs?
- Commercial General Liability coverage protects the project owner, manager, and possibly a lender, against general liability, damage and injury.
- Workers Compensation coverage is necessary for all vendors, contractors and subcontractors in case an employee suffers injuries on the job.
- Auto Liability coverage should be monitored for all vendor-owned, leased, non-owned and hired vehicles to ensure your company has protection in case of an accident. All of these coverages or policies can be found in a COI along with expiration dates, policy limits and other important information.
How do I review a Certificate of Insurance?
When reviewing Certificates of Insurance, pay close attention to the following:
- Waivers of subrogation
- Notice of cancellation endorsements
- Coverage deficiencies
- Coverages not available in today’s market
- Types and forms of additional insurances
- Primary and noncontributory wordings
Is it okay to ask for COIs from businesses I work with?
Yes. As part of your annual process, you should obtain certificates from all concessionaires that operate on your property. Generally, if you are at-risk by the actions of other parties performing a service for you, you should obtain a certificate.
What is the difference between an insurance policy and insurance certificate?
An insurance policy is an insurance contract including terms and conditions outlining what sort of compensation you can claim form your insurer. Conversely, an insurance certificate is evidence that the goods have coverage under a master policy.
Do I need a new COI, even if I have worked with a certain company before?
Yes, it is important to always have an up-to-date Certificate of Insurance. A COI is for a specific timeframe and occasion or job. You shouldn’t assume that the coverage remains the same from one circumstance to the next.
How do you request COIs?
Your business should request COIs from vendors and subcontractors you’re entering into contracts with. For instance, if Company 1 manufactures a product and enters into a contract with Company 2 to distribute it, Company 1 should request a COI from Company 2 to ensure Company 2 has the necessary coverage.
When do I request a Certificate of Insurance?
Your should request Certificates of Insurance when:
- Entering into a contract with a new client or vendor
- Signing a lease for a new space
- Renting out equipment
A company will generally request a certificate from the vendor or their insurance broker. To ensure the coverage is valid, it’s best to reach out directly to your isure broker. This should be done before signing contracts with vendors or during the bidding process.
How can I get a notice of cancellation on a COI?
The best option for certificate holders is to obtain a Notice of Cancellation Endorsement from the vendor’s insurer(s), specifically scheduling the certificate holder.
How long do I keep COIs?
The amount of time you keep a certificate on file depends on the nature of your organization and your location. In general, you should retain certificates for a minimum of five years.
All in all, if you have any questions regarding your COIs for your business, please contact one of our isure representatives today.