When it comes to managing risks when working with vendors, contractors, subcontractors, and other third parties, having a clear understanding of certificates of liability insurance is crucial.
Navigate the realm of COIs with confidence with our latest guide. In this article, we will explore the key aspects of liability COIs, including what they are, how to request one, and their importance in various scenarios.
What Is a Certificate of Liability Insurance?
A certificate of insurance is a document issued by an insurance company to give evidence of a vendor’s insurance coverage. A certificate of liability insurance aims to give evidence of specifically their liability coverage, which provides protection for things like bodily injury and property damage.
Liability insurance certificates, like other COIs, outline a policyholder’s insurance details, such as policy limits, effective dates, and any needed endorsements. The document demonstrates that an insured party has liability coverage in place, protecting themselves and the businesses they work with in the case of accidents, property damage, or other unforeseen incidents.
How Do I Ask for a Certificate of Liability Insurance?
Getting vendor certificate of insurance requests out the door can be challenging, but it’s essential to do it in order to verify their coverage. And typically, the earlier, the better.
Thankfully, requesting a certificate of insurance from a potential vendor is typically not a complex process. Here’s how to get a certificate of liability insurance from relevant third parties:
- Clearly communicate your requirements. Start by informing the contractor or vendor that you need a certificate of liability insurance from them as part of your contractual agreement. Specify the minimum coverage types, policy limits, and any additional insured endorsements you require so they know exactly what they need to tell their insurer.
- Wait for them to deliver the COI. Part of the insurance certificate requesting process lies with the vendor themselves, who has to go to their insurer (in person or via an online portal), provide relevant information, and request the document. They’ll typically get it after a few business days and send it straight to you.
- Verify adequate coverage. Once you receive a vendor certificate of insurance, review it to ensure that it meets your specified requirements. Confirm that all details are correct and that the coverage types, policy limits, and effective dates align with the level of risk associated with the project or services provided.
When Do You Need a Certificate of Insurance from a Vendor?
Think of it like this: you want your vendors and third parties to be covered from the moment they walk onto your job until the moment they complete it. The most reliable and standard way to verify this information is through COI collection and verification.
Essentially, you need a certificate of insurance for vendors or subcontractors whenever they provide services or work on your behalf. This is crucial to protect your business from potential liability arising from their actions.
Whether it’s construction work, maintenance services, product delivery, or other specific service work, requesting a COI ensures that any vendor you want to work with has the necessary insurance coverage to mitigate risks associated with their work.
To summarize: you need a COI from any third party you work with, and you should get it from them before they begin said work.
Is a Certificate of Liability Insurance the Same as a Declaration Page?
Some people wonder about the difference between COIs and declaration pages, but to put it simply: no, a certificate of liability insurance is not the same as a declaration page.
A declaration page is an internal document issued to a policyholder by their insurance company that provides a summary of policy details, including coverage types, policy limits, deductibles, and endorsements.
A COI, on the other hand, is a document issued to a policyholder at their request by their insurance company as proof of insurance coverage, typically to be distributed externally to hiring parties like you. It includes policyholder information, coverage details, and any needed additional insured endorsements.
What Are Certificates of Insurance Used for?
Certificates of insurance are used for several important purposes:
- Risk management. COIs, especially liability COIs, help manage risks associated with contractor or vendor services by ensuring they have adequate insurance coverage. This protects your business from potential liabilities arising from accidents, property damage, and other related incidents.
- Compliance. Many industries and contracts have specific insurance requirements in place. COIs help ensure compliance with these obligations, helping your business avoid penalties and breaches of contract.
- Proof of insurance. COIs provide tangible evidence that vendors have valid liability insurance coverage. This proof is often required by clients, project owners, or regulatory entities to ensure the third party is adequately insured.
How Do I Get an Insurance Certificate
To get an insurance certificate, you first need to contact your insurance provider or insurance agent. They can generate the certificate (COI) for you. All you have to do is give them details such as your insurance type and policy number. Your insurance provider should then be able to process your request and issue a certificate to you. This can be done electronically or can be sent my regular mail.
It is important to review your COI to make sure all of the information is accurate and up-to-date. This can become time consuming if you’re managing multiple COIs, which is where myCOI can come in.
How myCOI Can Help
Understanding the importance of a certificate of liability insurance is vital for those working with vendors, contractors, and other third parties, in order to manage risks and protect their businesses. But you don’t have to handle all of your COI management and verification needs alone. Learn how myCOI can help you achieve your business dreams while mitigating risks as much as possible.