What is a legal COI?

September 1, 2023

Businesses around the world utilize COIs to bolster their business partnerships and gain peace of mind when entering new dealings. Among the many things on business owners’ minds, they must make sure that the people they work with have appropriate insurance coverage as it pertains to their work. Most do so through COIs or Certificate of Insurance Services.

It is important to be sure that any COIs you are dealing with are accurate and produced ethically. A legal COI is only recognized if a licensed insurance broker issues it. It is, in fact, illegal for someone to attempt to create their own COI form. 

In this blog, we’ll discuss more important details regarding COIs, the information they include, and when one is considered legal. 

What Does COI Stand for Insurance?

The term “COI” stands for “certificate of insurance.” Not an insurance policy itself, but rather a rundown of one, COI Insurance are used for business practices across various sectors. These certificates essentially act as a summary of an insurance policy—or, more specifically, evidence of its existence and a succinct account of its major details. 

What Is the Purpose of a COI?

COIs are most commonly used for one thing: proof of insurance. When you’re working with someone, especially a vendor, contractor, or other third-party service provider, you may not know if they have insurance. It’s important to confirm this fact, both so that they are covered in their jobs going forward and so that on-the-job accidents don’t snowball into claims, lawsuits, and serious financial detriments for your business—all things that are possible when insurance is not correctly verified. Read more about certificate of Insurance for Contractors.

What Is a Legal COI?

When someone purchases an insurance policy, it is a legal agreement they are beginning between themselves (paying a monthly premium for financial protections) and an insurance provider (providing said protections in the case that they are necessary). 

A COI is a summarized reflection of that policy. It doesn’t provide any new legal information, but it, like the policy, can only be generated by the insurer that a policyholder has decided to work with. 

In short: You should obtain a COI from vendors that you want to work with to guarantee that they have an appropriate level of protection for the job you wish to hire them for—and ensure that it came from their insurance provider so that it is valid and legal.

What Does COI Include?

Let’s cover the important details included in a typical certificate of insurance for business.

  • Policyholder information. You’ll need to confirm that this is the person you need insurance verification from.
  • Insurance agent or broker information. The provider of the policyholder’s insurance coverage, as the only one who can provide them with a COI pertaining to their policy, is noted.
  • Policy information. Here’s where you’ll see essentially a summary of the insurance policy in question. This will include the type of coverage (which policy they’re being covered by) and the policy limits (to what monetary level they are being protected). It will also include effective dates of coverage (how long the policyholder is covered for under their current agreement) and expiration date of coverage (specifically when they’ll run out of coverage, before which you should work with them to ensure that they renew it).
  • Certificate holder information. As the entity requesting evidence of coverage from another entity, you’ll have your name noted on the document generated specifically for you in order to verify if someone’s coverage meets your needs. If you have any COI vendor requirements, you should outline them to the policyholder in your initial certificate request.
  • Additional information. When applicable, other information or endorsements will be included in a COI Certification.

Is a COI the Same as a Policy?

A COI is not the same thing as an insurance policy. As we explained above, COIs cover many of the details that are included in an insurance policy, but only to the degree that they get the most important information across. A COI is essentially a summarized insurance policy. It alone does not provide financial protection; it can, however, provide evidence of an insurance policy that does. 

Why Would Someone Ask for a COI?

People use COIs for a lot of reasons. The biggest thing to keep in mind here is that in situations where you could be held financially accountable for accidents caused by your partners or hires—you’ll want to ensure that that doesn’t happen. You don’t want your third-party contractors to be underinsured or uninsured, both because it hurts them and because that downstream risk could fall to your business to take care of. 

Instead of taking that risk, ensure that every third party you work with has an appropriate level of insurance coverage. It’s not too much to ask—it’s your due diligence! Requesting COIs is a very commonplace business practice that most third-party providers should be used to, but if they’re not, there are tons of resources that myCOI and others offer to help all parties out with the process.

How myCOI Can Help

Don’t wind up with unnecessary claims. Ensure the protection of your business and all parties that work with you. Call us today to find out how to do all of that simply, easily, and consistently, and with a team of experts always ready to back you up. 

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