Businesses are responsible for proving their contractors and vendors are insured. A third party contracted by a company that causes personal or property damage can put their client at risk of costly litigation. In these troubling economic times, businesses can face bankruptcy if they are held accountable for any damage their third parties commit.
A certificate of insurance (COI) confirms that those third parties carry enough coverage. Knowing the details regarding a COI form is critical whether you’re a certificate holder who receives COIs or a named insured who provides them.
What is a Certificate of Liability Insurance?
Contractors and vendors have to demonstrate that they own the best insurance coverage for their specific circumstances. Any company that hires them doesn’t want to be held liable for any negligence or accidental mishaps that occur during a job.
Shifting the onus of insurance to third parties is only one part of the equation. Companies have to possess proof that liability insurance is active for all of their third parties.
What is a certificate of liability insurance? What is a certificate of insurance for vendors and contractors?
A certificate of liability insurance is a document issued by an insurer that states the policyholder is insured against particular actions to certain levels of protection. Contractors and vendors have specific liabilities that need to be covered. Their COIs can show their clients that they are insured, thus limiting their clients’ liability risk.
How to Get a Certificate of Insurance
If you’re a contractor or vendor, then you should know how to get a certificate of liability insurance. You should understand the process to request and receive one when you first purchase a policy. If you’ve lost one, contact your insurance agent or broker and they should be able to help you obtain a copy.
Some insurance companies might allow their policyholders to order a certificate of insurance online. A certificate of insurance PDF can be downloaded and presented at any time.
If you’re a third party and know how to get a certificate of insurance, then you can get to work quickly when you have proper documentation. Having COIs on hand can speed up the hiring process and make life easier for your employer – two benefits that can have positive effects in the long run.
How to Request a Certificate of Insurance from a Vendor
If you own a business that uses third parties, then you’ll probably have to know how to request a certificate of insurance from a vendor or contractor. Any third party that performs any kind of work for you will generate some level of risk. These workers must give you a certificate of insurance.
You need proof that your company is protected from unforeseen incidents and negligence. As the owner of your business, you must decide how to request COIs. You can ask for them before a vendor places a bid on a job, during the application process, or after a vendor is hired. You should ask for them as soon as possible so you avoid any unpleasant surprises.
What to Do If You Have Too Many COIs to Manage
If you’re a business owner or in charge of insurance compliance for your company, then the volume of certificates of insurance depends on the number of third parties employed by your company. The more third parties you have mean there will be more COIs to oversee. They all need to be insured and be able to prove it. Your company has to handle the responsibility of handling all of this paperwork.
Verifying one certificate of insurance for business owners may be an easy task. Having to check and track numerous COIs can become a burden. This is a job that shouldn’t be taken lightly. Just one missed COI can increase the chances of your company being held liable should one of your contractors harm someone or something on the job. All it takes is one unfortunate event to ruin the reputation and financial security of your business.
If you find yourself in this situation, you can use a solution like myCOI to help simplify your insurance tracking. You need a guarantee that your insurance requirements are being met. myCOI can ensure you remain protected with the appropriate coverage. myCOI can also automate your COI tracking, eliminating the worry about stacks of certificates cluttering up your office or hours of chasing down certificates.
Certificates of insurance issues and answers are widely available. Knowing as much as you can about COIs can help you become more efficient in dealing with them.