A Certificate of Insurance (COI) is a document issued by an insurance company, agent, or broker that verifies the existence of an insurance policy. It summarizes certain types of insurance coverages and the corresponding limits that have been purchased by the entity in a single snapshot, typically no longer than a page. Think of it as the cliff notes to your business insurance policy.
Most insurance professionals use a template developed by the Association for Cooperative Operations Research and Development (ACORD) to issue a COI. This is why you’ll often hear a COI, in insurance terms, referred to as an ACORD certificate or ACORD 25 form.
Similar to how a medical insurance card conveniently provides a synopsis of your coverage, a COI provides policy coverage types and limits in an easily sharable format so that business owners, vendors, and clients can quickly ascertain whether or not someone is properly covered without sifting through a policy the size of a novel.
Small businesses and contractors will typically request a COI in situations where liability and losses are of concern—which could be just about any situation if you’re exercising proper safety precautions. If something goes wrong, business owners want to ensure the contractors and other businesses they’ve hired are properly insured.
Much like online reviews or references, COIs can help build confidence in your business. A COI quickly and easily verifies to vendors, customers, clients, and landlords that a business is indeed insured as of the date shown on the COI. While all partnerships come with inherent risk, verifying that all parties have adequate coverage can help establish trust so that you can work together safely.
What Information is Included in a COI?
A COI is usually included in the package of documents you’ll receive upon purchasing your business insurance policy. It includes the following information:
- Policyholder Information: name, address, and contact information for the policyholder.
- Insurance Company Information: name, address, and contact information of the insurance company that issued the policy. This allows the recipient to verify the authenticity of the coverage.
- Policy Number: the unique identifier for the policy. This is crucial for tracking and referencing the specific coverage associated with the COI.
- Policy Period: The status of the policy, including effective and expiration dates. This might be the most important piece of information as it ensures the policy is currently active.
- Policy Type: The type of insurance coverage, such as general liability, workers’ compensation, commercial auto insurance, or commercial property insurance that the policyholder has obtained.
- Coverage Limits: This information outlines the maximum amount of coverage provided by the policy for various types of claims or losses, such as bodily injury, property damage, or medical expenses.
- Additional Insureds: If other parties need to be covered under the policy, they will be listed as “additional insureds” on the COI.
- Certificate Holder: If another party has requested the COI, their name and contact information will be listed at the bottom of the document as the certificate holder.
How to Request a COI
The process to request a COI is straightforward and begins with reaching out directly to the insurance carrier, either by phone, email or through an online portal. Be prepared to provide essential information, including the policyholder’s name, policy number, and any specific details required, such as additional insured parties or project-specific requirements. Once your request is received, the insurance provider will generate the COI with the necessary information and send it to the party who requested it.
Best Practices for Tracking COIs
Businesses should track COIs from all third-party vendors. Even after a COI expires, it’s a good idea to hang on to it for your records. While the period of coverage may end on a particular date, the liability for incidents that occurred during that period remains long after the project is completed. Archived COIs can come in handy during potential future disputes.
Every business’s tracking process will depend on its unique needs and bandwidth, but having a well-defined process in place is key. It’s a good idea to establish clear lines of authority for collection, compliance review, and monitoring. Your process should be transparent, supported by software, and updated regularly. Here are a few tips to keep top of mind:
- Task someone on your team with maintaining all COIs in your system. Ideally, this person has experience in compliance and/or management.
- Collect COIs from every third party you work with and store them in a secure database. It’s best if these assets are stored digitally so that you can easily retrieve documents and protect sensitive data.
- Each time you receive a COI, carefully review the coverage listed to ensure it meets your requirements.
- Continue to monitor for any changes. Whether this is done manually in Excel templates or through COI tracking software, someone should be reaching out for updated information as policies expire or vendors switch carriers.
When it comes to managing risk and ensuring the protection of your business, insurance plays a crucial role. A COI is an easy way to verify that someone is responsibly insured without the burden of sifting through a bulky policy. By requesting COIs from all contractors and providing them to all vendors and clients, business owners create transparency, mitigate risks, and foster safe partnerships.
We hope you have found this general information about COIs helpful. For more information or questions, be sure to contact your agent or broker for professional advice.