What Is A COI? A 5-Minute Introduction 

COI Management | September 9, 2022

“What is a COI?” is a vital question that a business operating with a network of contractors must adequately address. Investing time into learning about a Certificate of Insurance (COI) and how it is an invaluable tool inside companies hiring contractors is essential. This blog will cover a basic answer to the question and give an overview of how businesses can begin implementing COI best practices to protect their organization.

What Is A COI?

The Certificate of Insurance (COI) is a document that provides details and information relevant to insurance coverage procedures inside an entity. Collecting a COI verifies that contractors and vendors hired to work with an organization possess active insurance policies. Additionally, COIs ensure that contractor coverage encompasses the type of work each contractor or vendor will perform for a company and its clients. 

It is important to note that companies utilizing networks of independent contractors should have COI documentation for each contractor that works within the organization. Collecting proper and complete documentation from every contractor before work begins with the company ensures protection against future potentially costly coverage problems. 

The format for COIs is relatively standard and consistent across the board for organizations. A COI generally includes the following type of information:

• Policyholder’s Name
• Coverage Types such as Auto, General Liability, Umbrella, and Workers Compensation
• Policy Effective and Expiration Dates
• Limits of Coverage
• Special Language including exclusion details and explanation of endorsements   

What Is A COI Used For Inside Networks of Contractors?

Generally, organizations that use networks of independent contractors for their services outline the stipulations of specific contractor insurance requirements within the terms and conditions portion of their contract. A company may require policyholders to list them as additional insured to mitigate the organization’s risk in an incident caused by a contractor’s negligence that also has a financial impact. An example of this scenario would be injury or damage done to a third party, customer, or property in which submission of a claim against the contracted company’s (policyholder) general liability policy would occur. 

What Is A Certificate Holder Versus Additionally Insured?

A certificate holder on the policy receives a copy of the policyholder’s COI, further verifying insurance and details about the type and limits of coverage. Certificate holders are not authorized to file claims under the policy. They are more likely to receive notifications in cases of annual renewal, changes, or cancellations to the policy by the policyholder.

However, the entity with the authorized right to submit a claim is the additionally insured. Indication of additionally insured entities within a COI appears in two ways:

• An X or a checkmark in the box marked ADDL INSR within the Generally Liability portion of the COI.
• Provision of the additionally insured entity name in the DESCRIPTION OF OPERATIONS portion. 

Additionally, insured parties may receive coverage changes or cancellations from the insurance carrier.

Professional COI Management Options

Properly managing COI compliance can be tedious and nuanced; however, it is critical to reduce risk, protect organizations, and uphold reputations. For this reason, many companies choose to outsource COI management processes to experts in the field. A variety of crucial benefits come with choosing professional COI management:

• Reduction is the cost associated with administration procedures with insurance and claims.
• An improved compliance rate amongst networks of contractors.
• COI management processes are simplified and consolidated in a centralized system.
• There is less exposure to the risk factors of working with underinsured or uninsured contractors.  

Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.

About PlusOne Solutions

PlusOne Solutions help businesses create safer working environments and protect companies from the associated financial, legal, or reputational risks of hiring contractors and vendors. To learn more about how PlusOne Solutions can help an organization with COI management, visit https://www.PlusOneSolutions.net.