What Is a COI in Construction?

August 1, 2023
What is a COI in construction terms

Certificates of insurance, also known as COIs, are important documents in the construction world.

Contractors working in verticals with a high degree of risk, such as transportation, landscaping, and construction, need to know about COIs to ensure that they remain compliant and financially protected in the case of accidents. 

Follow along in our guide to what a COI means in construction terms and learn how you can manage construction COIs with ease. 

What Is the Meaning of COI?

A COI, or certificate of insurance, is a document issued by an insurance company that serves as proof of insurance coverage. A COI provides information about an insurance policy, including the type of coverage, how much the policy will cover (policy limits), how long coverage will last (effective dates), and details about the covered parties. Here is an example of what a COI looks like.

Requiring an up-to-date COI from contractors that you wish to hire helps you ensure that they have adequate insurance coverage in place to protect themselves against potential risks or liabilities that could occur during the span of the work.

What Does a COI Mean in Construction?

In the construction industry, as with others, a COI refers to a certificate of insurance.

A COI is proof of insurance coverage held by contractors, subcontractors, and other parties involved in construction projects. It provides key information about the insurance policies they are covered by to protect against liabilities that can come with construction activities.

With lots of moving parts and hazardous work zones, there is generally a high degree of risk associated with construction projects. That’s why it’s so important to ensure your contractors are correctly covered. Not only would they have to pay out of pocket in the event of a claim if they went on uninsured, but they could sue you for negligence for not ensuring their protections. Avoid looming claims and the threat of costly litigation with certificate of insurance services like myCOI.

What Is a COI and How Do I Get One?

To obtain a certificate of insurance for contractors or vendors you wish to hire, ask them to make an official COI request to their insurance provider. You can do this however you prefer—virtually, in-person, etc.—but be sure to provide them with any details you need upfront and enough time to get it to you. 

For example, it’s fairly common in construction contracts to require that a hired third party add you as an additional insured onto their policy. For a small fee paid to the insurer, the contractor essentially agrees to name your business as another party that will be covered by the policy as is relevant during your working agreement, helping protect you from potential claims that could arise from the work that they perform.

Once they have what they need from you, the prospective hire in question will then work with their insurer to obtain a COI that accurately reflects their coverage and names you as the certificate holder and provides it to you. 

The process doesn’t end there, however, as it becomes your job to ensure that the certificate is valid, meets your requirements, and will cover them adequately. Understandably, more businesses than ever are automating the meticulous, manual COI tracking work to easy-to-use COI services.

How Do Certificates of Insurance Function in Construction?

For both construction workers and the businesses hiring them, COIs translate to improved risk mitigation.

As a vendor, you can obtain COIs (for yourself, to provide to clients) and request them (from other parties, such as businesses you’d like to work with). In either case, you can confidently move forward when COIs are presented, accurate, and verified. 

However, there is a lot of work involved in the verification piece, and unfortunately, the headaches stemming from small mistakes can be large and costly. 

If you’re struggling to manage all of the COIs coming along in your line of work, you’re not alone. Many firms turn to COI services—sophisticated compliance software backed by industry expertise—to get the compliance help that they need.

How To Solve the Challenge of Tracking Multiple Construction COIs

Managing multiple COIs from multiple subcontractors can be a headache during a construction process. To manage COIs well, you have to track expirations, accurately assess any risk factors, review key information, and manage potentially hundreds of pages of documents that need to be continuously reviewed. By utilizing myCOI’s tracking services, vendors can turn the potential headaches of COI management into a streamlined process with fewer errors and more efficiency. 

With our help, you can confidently request and manage accurate and up-to-date COIs, ensuring compliance with contractual obligations and building stronger business relationships based on trust.

Ready to step up your compliance game? myCOI has you covered with an in-house staff of construction compliance experts. Don’t waste another second wondering if your workers are covered. Call us today

Key Terms To Know For COIs and Construction

What Is Subrogation?

When talking about COIs in the construction industry, subrogation is the legal standard that allows insurance companies to go after third party who have caused a liability payout. This means that your insurance may sue your vendors if they had to pay out a liability incurred by them.

What Are Exclusions?

It is important to check the exclusions on a COI. These exclusions limit or remove coverage for certain circumstances. Common exclusions on COIs for construction can include things like pollution, sinking, mold, poor workmanship, or cracking. It is essential to review every exclusion on a COI to ensure successful risk management across a project and across vendors and subcontractors.

What Is Builder’s Risk Insurance?

Builder’s risk insurance is exactly what it sounds like – an insurance policy that protects a building’s owner from liability during the construction process. It covers things like supplies, building materials, and working equipment from liability issues such as vandalism, fire, or theft. It can be verified with a builder’s risk insurance COI.

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