Ensuring proper insurance coverage for all third parties that you work with is extremely important in industries where third-party hires are common. Both to meet contractual obligations and mitigate potential risks, whatever the line of work, companies must do their due diligence to protect their workers and their business.
In this blog, we’ll discuss what insurance certificate tracking is, why it’s crucial, and how businesses can implement it and other certificate of insurance services into their risk mitigation strategy.
Introduction to Insurance Certificate Tracking
Let’s cover the basic principles of insurance tracking services. Insurance tracking is the process of collecting, reviewing, and monitoring third-party certificates of insurance (COIs) to ensure that all hired third parties maintain the insurance levels required of them.
COIs are important documents in the insurance space that act as evidence of someone’s coverage. These documents, typically just one page in length, are issued by a policyholder’s insurance provider and serve as proof of their policy’s existence.
Certificate tracking is relevant in the business and insurance sectors, as well as in verticals like construction and healthcare, where third-party claims can be common.
What Is the Insurance Certificate?
An insurance certificate, certificate of insurance, or COI, is an important document in the insurance space. It essentially provides proof that a policyholder has the coverage that they claim and gives a quick overview of the active policy. An insurance provider currently providing coverage to a policyholder is the only entity able to produce a valid certificate.
There are various types of insurance certificates that correspond to various types of policies. For example, a certificate of liability insurance will provide proof of someone’s general liability coverage.
Key components included in an insurance certificate are:
- Policyholder (who’s being insured)
- Contact information of policyholder, insurer, and COI requestor
- Policy details, including coverage, coverage limits, and effective dates
- Endorsements such as additional insureds
What Is COI Tracking?
Now that we’ve discussed what an insurance certificate is let’s dive deeper into what COI tracking actually means. The process aims to ensure that third parties maintain the required level of insurance coverage for a job and involves systematically managing and verifying COIs.
Usually, this begins with collecting COIs from contractors, vendors, suppliers, or other third parties for pertinent policies. Businesses must then verify the certificates and that the coverage meets all necessary requirements. Finally, COI tracking involves monitoring the expiration dates to ensure that coverage remains current throughout a project or contract.
There are many benefits to implementing COI tracking systems, the main one being that businesses that do so are less likely to be hit with uninsured or out-of-pocket claims. There are also technological solutions for COI tracking, such as myCOI’s premier platform, which can help businesses streamline verification, communications, and overall management.
Why Is It Important to Track Certificates of Insurance?
Insurance certificate tracking is a vital component of risk management and compliance for businesses that work with third-party contractors for several reasons. Let’s walk through a few of the major ones:
- Minimizing risk and liability. Businesses protect themselves from potential liabilities with insurance coverage and by ensuring adequate insurance coverage of their hired third parties. This is because if an incident occurs and a third party does not have proper insurance in place, the hiring company could be held responsible for the damages. Insurance tracking helps minimize this risk by ensuring that all parties involved in a project are adequately covered.
- Ensuring compliance with contractual obligations. Insurance tracking is not just a cost-effective best practice but often a contractually obligated one. Many contracts stipulate that contractors must carry specific types and amounts of insurance coverage, such as general liability and workers’ compensation. Tracking COIs allows businesses to verify that all parties meet necessary requirements, reducing the risk of contract disputes and related delays.
- Facilitating the management of claims. While it can’t remove the threat of claims completely, effective insurance tracking can also help ease claim management later down the line. In the event of an incident, having up-to-date COIs on hand for each hire allows for a smoother claims process since it’s easier to determine individual coverage levels and file claims with the appropriate insurance providers.
- Building trust with clients and partners. Maintaining a strong process for insurance certificate tracking demonstrates that your business takes risk management seriously and that you’re committed to working with trustworthy, insured third parties. It makes you look reliable and opens up more opportunities for potential collaboration.
Track Your Third-Party Insurance Certificates with Ease
Don’t go it alone when it comes to verifying third-party coverage. Lean on a trusted partner with over 15 years of experience keeping clients compliant and protected with a comprehensive platform for tracking insurance certificates. With myCOI, you’re in good hands. Call us today to learn more.