As you may already know, without a proper certificate of insurance services (COI) collection and management process in place, you could be opening up your business to the risk of underinsured claims, costly litigation, failed audits, and more.
Many people still have lots of questions about COIs, including what they do and the costs associated with them. Thankfully, while insurance policies have a cost tied to them (in the form of monthly premiums), COIs do not and are usually free to request, issue, and use.
In this blog, we’ll discuss what this means for you and the vendors you verify coverage for.
What Is a COI?
A certificate of insurance, often referred to as a COI, is a document that is essentially a summary of an insurance policy. They’re important because they are one of the few things that can validly act as evidence of someone’s coverage. Click here to learn more about what is a certificate of insurance?
In business, especially when working with various contractors, vendors, and other third-party providers, COIs are the standard method of verifying coverage and compliance with requirements—whether they be yours, your state’s, or the industry your vendor is operating in.
How Do You Make a COI?
Technically, you do not “make” a COI. A certificate of insurance can only be issued by a verified insurance provider who is providing coverage to someone in the form of an active, valid insurance policy. In order to get a COI from a vendor or contractor, you’ll have to ask them for one in the form of a COI request.
How Do You Ask for a COI?
When you’re ready to begin working with a new third-party service provider, it’s paramount that you confirm that they have adequate coverage in place before starting work with them. To do this, you’ll need to ask them for a certificate of insurance officially.
To make a COI request, here’s what you’ll do:
- Deliberate with your team, if necessary, about all of the vendor requirements to include in your request. This could include minimum coverage amounts, policy limits, and additional insured endorsements, for example.
- Write (or type) out your needs and requirements, as well as the name and contact information for your business that you’d like printed onto the form in the certificate holder space.
- In the introduction of your ask, inform the contractor that you’ll need a certificate of insurance from them for a policy type that you specify based on the type of work being done.
- Send off the request and expect it to be fulfilled within a few business days (to weeks, at most)!
You can submit a COI Request Form online, through mailed communications, or even in person, although we’d generally recommend an email which can serve as an easy record for both parties.
Who Should a COI Be Made Out to?
When an insurance provider fills out a certificate of insurance, there is one set of information that they cannot generate from their own records, and that’s who the COI should be made out to.
In insurance verification, the party looking to receive and validate the certificate becomes, throughout the transaction, the “certificate holder.” In the case that you are the one hiring vendors and need to look at their coverage, you will be the certificate holder, and the COI should be made out to you!
What Are COI Charges?
As we mentioned earlier, there are actually no costs associated with COI generation and collection. Yes, you read that right. A COI is completely free! So, when you make a request to a prospective vendor, they’ll go to their insurance provider and work with them to generate it at no charge to them.
While in our blogs, we use the term “COI” solely to refer to certificates of insurance, somewhat confusingly, some people also use the term “COI” to mean “cost of insurance.” The cost of insurance refers to the amount of money required to keep a policy active, and this concept will obviously come with charges.
It is important to note here that if, for any reason, an insurance policy becomes void (for example, if a policyholder were to stop making their required monthly payments), then so too does the COI.
How Expensive Is a COI?
Again, COIs are free of charge. Whereas insurance policies themselves have a paid element to them, an insurance certificate is more like a receipt, a proof of purchase, or a separate certificate that shows that someone has the coverage that they say they do.
While COIs themselves are free, the cost of keeping up with them comes in the form of lots of manual labor and mental headaches. And in cases where something goes wrong on a job, the cost of not having COIs can become incredibly pricey. That’s why many businesses have turned to helpful software that aids in COI tracking and management in order to save them time and money while boosting efficiency.
How Can myCOI Help Me With All of My COIs?
Whether you’re managing 1,000 or 10,000 COIs in a typical quarter, myCOI can help you more efficiently work through your stack of certificates by automating the error-prone parts—and backing you up with a team of industry experts. Learn why we’re the best COI management software on the market today. Call us today if you’re ready to hear more.