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A Certificate of Insurance (COI) provides information on specific insurance coverage. The certificate is proof of the insurance you have and typically contains information on the following:
- Type of coverage
- Limit for each coverage
- Insurance company name
- Policy number
- Named Insured
- Additional Insured(s)
- Effective policy dates
Why are COI’s needed?
Since COI’s are essentially a snapshot of your valid coverage polices, companies you are in contract with will often request them. They are checking to make sure your company has all the required limits and active policies in place, in case an incident was to occur. Instead of providing full copies of your insurance policies and endorsements, the COI simplifies the paperwork required.
Are COI’s important?
The short answer is yes, they are important. They verify your insurance coverages to another company. However, you only need to provide a copy of your COI when it is required. You should have a contract with the other party before doing so because the COI does share your insurance policy numbers and other private information.
Sometimes third parties are added to a COI as added additional insureds. As the insured, it’s important to understand that if an incident occurs, there could be a negative effect on your limits. Simply put, if you have $1MM in limits, your company may share those limits with each additional insured listed on the policy. If there were a claim, your company would not receive the $1MM in limits you’re paying for; instead, the limits would be divided between the additional insureds listed.
Do COI’s provide coverage?
No, COI’s don’t provide actual coverage but are a snapshot of coverage that exists on the policy form. Although the terms of your contract can clearly state that insurance coverage is mandatory, if the insurance coverage does not exist, your company could be sued for any damages caused by the third party. This is why it’s important to always ask for a copy of the hired party’s insurance coverages prior to work, to avoid such costly missteps.
If you have questions about your insurance limits and coverages, contact us today for a free risk assessment!