How Much Does a COI Cost in the USA?

June 1, 2023

Any business with an insurance policy, such as general liability insurance or workers’ compensation insurance, has the right as a policyholder to request and receive a COI corresponding to their coverage.

A COI, meaning a certificate of insurance, is a very important piece of paper in the business world. It’s essentially a document that validates the terms of an insurance policy. The purpose of a COI is to provide evidence of a party’s coverage in a shorthand format. COIs help protect businesses against potential financial losses, and it’s important that you obtain one from each third party (i.e., contractor or vendor) that you work with.

Instead of going around asking for dense policy documents from every third party you hire, or worse, being unsure of your third parties’ coverage status and risking lapses in coverage that could leave you on the hook in the case of claims, savvy businesses request COIs from third parties before they allow their job to begin. 

In this article, we’ll discuss the costs and processes surrounding COIs to get you feeling more comfortable with the ever-important concepts of insurance certificates and compliance.

How Much Does a COI Cost?

COIs are crucial insurance compliance documents that businesses across industries utilize to verify coverage. Thankfully, COIs in the USA typically do not have a cost associated with them—that’s right, they’re usually free. 

This is for a few reasons. Firstly, insurance certificates are not actually insurance policies but rather proof that a policy is in place. It’s more like a receipt than an actual purchase. Secondly, the policyholder (the third party you’re hiring, in most cases) already pays premiums to their insurance provider in exchange for the coverage, so they are not typically asked to pay for certificate requests. 

Again, insurance policies themselves do come with a cost associated with them in the form of premiums payable. The cost of insurance coverage can vary based on factors such as the type of activity being covered, the level of risk involved, the policy limits, the deductible, etc. However, as a COI is just documentation that confirms the existence of the coverage, its “cost” is essentially included as part of the overall price of the policy. 

Insurers can charge for COIs, but it doesn’t mean they should. It is considered a bad practice for insurance companies and brokers to attach a cost to generating a certificate of insurance. It’s more likely that the vendors that you’ll be requesting and validating coverage for will get certificates from their insurers free of charge.

What Is a COI in Business?

A certificate of insurance for business is essentially official proof of an insurance policy. This might not sound that important, but you’ll find that in many cases, it is. 

You see, lots of situations come up throughout different business transactions where, by entering into a contractual relationship with a party, an individual or business is (in part) taking on the risk of the other’s actions. 

COIs help keep all parties honest and accurate about the type and amount of insurance coverage they have, as well as how long it’s active so that everyone is aware of the amount of risk they’re taking on within that relationship. 

Is a COI the Same as a Policy?

A COI is not quite the same thing as an insurance policy. It’s essentially a summarized one-pager of someone’s coverage—so it serves as evidence of an acting insurance policy but is not one itself. 

Because policy documents are dense and the level of detail needed for a policyholder (the person being covered by a policy) is significantly higher than an entity doing business with them (the person hiring them or otherwise working with them), the American standard for insurance verification has become to rely on COIs.

Why Do Companies Request a COI?

So, we’ve now covered that insurance certificates, or COIs, are like official summaries of insurance policies, but why do companies actually request them? 

They do so essentially because by verifying that a third-party service provider’s insurance coverage is active and able to meet their requirements for a job, they can feel free to hire them without fear of running into compliance issues, insurance-related job pauses, or expensive claims stemming from potential risks. 

Using COIs—requesting them from vendors, verifying that they meet outlined vendor COI requirements, and managing various client records to ensure no lapses in coverage—keeps businesses protected. 

How to Request a Certificate of Insurance

Now that we’ve discussed the pricing hurdle—let’s dive deeper into the world of COIs. How does one go about requesting a certificate of insurance? 

All you need to do in order to get a COI from a third party you’re hiring is ask! For example, let’s say you work at a construction site. You’ll need to collect a certificate of insurance from all hired contractors. You would simply make a request to each of the contractors on the site to provide an insurance certificate to you at their earliest convenience. You can do this through email, a written letter, or even vocally. 

Be sure to outline any key details you need from their COIs, such as the type of coverage you’re mandating proof of and any other requirements you have. By officially requesting this proof of coverage, you will, in this case, become the “certificate holder,” and your name will be printed on the document before it’s delivered to you by either the third party or their insurer.

And remember, as the hirer of the third party, it is recommended that you obtain a COI from each one that you work with. It’s also imperative that you get this done before they begin work since accidents (and potential claims) can happen from the moment a job begins.

How Long Does it Take to Receive a COI?

Upon receiving a request for a COI, a vendor’s insurance broker or agent will generate the document. 

This process is generally pretty quick these days, especially with tools like online portals sometimes allowing for same-day digital delivery. At the most, one can typically expect to receive a COI within a couple of business weeks. 

Either the insurance agency or the contractor in question will deliver the document to you, which you can then verify to see that it meets your needs and proceed to enter your new business relationship with peace of mind. 

Can I Issue My Own COI?

Some people wonder if they can issue their own certificates of insurance. The answer, rightly, is no. Only the insurance agency that generated the initial policy can issue its corresponding certificate. 

Therefore, you must request COIs from an insurer—or, more accurately, from the party you’re hiring, who will then do the formal request to their insurer—for its issuance. As the policyholder, they’ll be able to easily request a COI, which the insurance agency will generate and deliver for them, typically within a few business days. 

Don’t Stress About COI Management Any Longer

If COI tracking is taking up more of your team’s time and mental burden than you thought, you’re not alone. Learn how myCOI’s smart software is helping businesses like yours be more efficient and lower their chances of having coverage gaps and oversights regarding their COIs. Contact us today.

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