Insurance protects a company’s finances. Companies that are insured can operate more effectively if they don’t have to constantly worry about being sued because one of the people they hired caused a loss.
Companies that hire vendors or subcontractors should make sure those third parties own insurance coverage. That can protect the third parties as well as the companies they work for. Proof of coverage comes in the form of certificates of insurance.
What is a certificate of insurance for vendors?
If a property management company hires a vendor, then the vendor must show evidence that they are sufficiently insured. This evidence is a certificate of insurance.
You should request certificates of insurance for subcontractors and vendors if they work for your company. Knowing how to get a certificate of insurance is of the utmost importance if you want to guard your company against liability risk.
How to Request COIs from Vendors
A certificate of insurance (COI) is a powerful document that can save your company a lot of money if it’s faced with a claim. Your vendors need to certify that they are insured.
Requesting COIs from vendors isn’t difficult. There are several methods you can use.
You can verbally ask for one, but it might be wiser to create a kind of paper trail in case the person claims they were never asked. An email or letter can suffice. A vendor might have trouble arguing they didn’t receive one if you keep a record of when requests were sent. If you need assistance writing a request, you can search online for a sample letter requesting certificate of insurance from vendors.
Your company can also insert the request into the language of the contract. If the terms include delivery of COIs and the vendor can’t provide one, then they’re breaching the contract.
Perhaps a better option would be to ask before you offer vendors contracts. You can require COIs during the request for proposal process. If vendors can’t provide COIs, then they can’t bid on a job. Making it clear early that you demand vendors to be insured can prevent any issues in the future.
If the vendor doesn’t have a COI because they don’t have a policy, then you should insist they purchase coverage otherwise they can’t work for your company.
If the vendor doesn’t have a COI, but they do have insurance, then they should contact their insurance agent or broker. Sometimes vendors can access their COIs online. If they have any problems, they can search for certificate of insurance online instructions on their insurance issuer’s website. A vendor who knows how to get their insurance certificate online can then promptly submit it and start work soon.
After you learn how to request a certificate of insurance from a vendor, the process becomes easier the more you do it.
When Do I Need a COI from Vendors?
Companies should reduce their liability risk as much as they can. Vendors and other third parties that work for your company need to prove they have adequate insurance coverage.
You should ask for a COI whenever your company hires a vendor. It’s strongly suggested to get one before they start work. Any actions they take create risk. Their insurance coverage can protect your company from any injuries they inflict while on the job. When your company has a COI on file, then you have proof that your company is protected from costly claims.
Best Practices Around Vendor COIs
When companies follow certificates of insurance best practices, they are shielding themselves from having to pay out heavy damages should their hired vendors injure property or people. Some of these practices include:
- Promptly requesting COIs: When it comes to getting certificates of insurance, the sooner, the better. Following through to ensure you receive a COI is also crucial.
- Maintaining an organized storage system: Keeping COIs in a central location can aid you if you need to find certain ones.
- Verifying every COI: Don’t just receive and file them away. You need to guarantee that every COI is authentic and shows the appropriate coverage. You can download a sample certificate of insurance PDF to learn what information should be on each one.
- Automating COI tracking and management with a service like myCOI: A cloud-based solution can streamline requests, collection, and compliance resolution, making all of these processes more accurate and faster.
Do You Need Help With Your Vendor COIs?
If you’re a risk management professional for a company that hires a large number of vendors or other third parties, then you have to request, track, and process a COI for each person. This means you have to check each COI for detailed insurance requirements, verify with insurers that the certificate is valid, and deal with third parties when their coverage is not acceptable.
You know how to get a certificate of insurance from vendors. You can effortlessly handle certificates of insurance issues and answers. However, the volume of COIs you must take care of can become overwhelming.
myCOI can help you simplify insurance tracking. The platform can give you one place to view your COIs, compliance, and risk reporting – which can lessen your burden and expedite the processing of every single COI you collect.