Businesses generally aim to mitigate their liability risk as much as possible. One important way that you can do this is by requiring that any contractors, service providers, or other vendors you work with provide you with a COI to ensure that your project is adequately covered in the case of any accidents or losses.
What Is A COI?
A COI, or certificate of insurance, is a document issued by an insurance company that provides proof of insurance and indicates that someone has coverage in place for the services they’re providing to you. COIs are used in various types of business partnerships – and could be the difference between your business paying for damages or staying protected from risk.
In this article, we’ll dip our toes into the world of COIs, explaining what insurance certificates are used for and when you should be asking third parties to generate them.
What Is a COI Certificate Used For?
You need to make sure that any vendors, contractors, or third parties you have hired have adequate insurance coverage to protect themselves and your company’s assets in the event of a claim. You can do this through the use of certificates of insurance.
Again, a certificate of insurance is a document that confirms coverage of the named insured of a specific insurance policy by summarizing a few key pieces of information about it. Some COIs may also include additional insured parties, meaning they’ll grant coverage for commercial general liability, to a third party associated with the project, such as your business as the hiring party.
There are many cases that a COI or a certificate of liability insurance can be used for. For example, if you are working with a contractor who may cause property damage or bodily injury to third parties while working on your premises, you will want to ensure that they have liability insurance that will cover professional liability for such damages. Likewise, while organizing events like concerts, conferences, or exhibitions, you may require vendors and exhibitors to provide a COI for the event as proof of liability insurance coverage in case anything happens during the event.
When Should I Ask for a COI?
Requesting COIs from third parties and service providers is crucial to ensuring adequate insurance coverage for your business for the entirety of a given project. As a business owner or the person at a business in charge of insurance compliance for third parties, it’s essential to protect yourself and your business from potential risks in the case of accidents.
So, when should you ask for a COI? Any time you’re hiring a contracting party. If you already have a contract in place with a third party but no certificate proving insurance liability coverage has been generated yet, you should make a COI request to them right away. Don’t allow them to start working until the COI is in hand and insurance cost is verified.
You can ask a vendor for a COI before they place a bid on a job, during the application process, or after you hire them, but generally, we’d say the sooner, the better. Since accidents can happen from the moment that a service provider starts their work, potential claims linger as soon as the job begins. Therefore, best practices recommend that you ask for a COI from any third party you want to work with before you officially hire them and begin the project.
To ask for a COI, simply approach the third party that you’re working with (or do so via email or a mailed letter) and request the document from them. In most cases, workers will know this protocol and quickly be able to get a certificate of insurance generated from their insurance provider to deliver to you.
How Fast Can I Get a COI?
Getting a COI in a timely manner depends on various factors, such as your third party’s availability and their insurance company’s processing times. Additionally, COI requirements vary by state, meaning that some insurance requirements may require more information from a requester than is standard.
Typically, COIs can be generated within a few days but may take up to a few weeks to process. Some insurers have online portals that allow people to download a COI directly from their website once they have been issued a policy.
Even though you, as the business hiring a third party, are not responsible for going to your insurance agency and generating the COI, there are a few things you can do to help them generate COIs faster:
- Get familiar with the COI request process in your state. Understand what information is needed of you, and be sure to provide it all accurately upfront.
- Ask for COIs in advance of work beginning, giving your contractor and their insurance company ample time to prepare and send the document.
Once you have the certificate of insurance proving that business insurance coverage from a third party you’re working with has the needed protections in place, you’ll need to validate it, track it, and store it. You can save time and improve accuracy on all of these points by using a COI management service like myCOI.
Easily Manage Your Business’ COI Tracking Process
Manually tracking every COI can be time-consuming, prone to human error, and costly. Reduce the menial load on your team and lower your chances of coverage gaps and oversights expert certificate of insurance services. Let our team help you manage your stacks of COIs.