Certificate of Insurance Best Practices: How You Should Be Handling Contractor COIs

COI Management | April 25, 2022

The Certificate of Insurance is an invaluable tool when working with any contractor network to deliver, install or service your products or customers. Knowing and following certificate of insurance best practices are a key piece of any organization’s risk mitigation approach. 

This blog will discuss various steps that can be taken to successfully review and manage your COIs so that if you have an unfortunate situation where you are involved in a claim or litigation, your organization will be better protected.

Understanding COIs

The Certificate of Insurance (COI) is the document that provides the relevant details of the insurance coverage that an entity has in place. In the case of contractor networks, this is a document that should be in place for every contractor your organization works with. 

The COI is generally provided in a standard and consistent format and should contain information such as:

• Policyholder’s Name
• Type of Coverage – General Liability, Umbrella, Auto, Workers Compensation
• Policy Effective and Expiration Dates
• Coverage Limits
• Special Language – explanation of endorsements, exclusions

The purpose of the insurance coverage is to protect your organization and transfer risk to the contractor/servicing company and their insurance carrier. To do this, adding your organization’s name as Additional Insured, is important as well as ensuring the coverage is noted as primary and non-contributory. By extending the coverage to your organization, you create an extra layer of protection if a claim arises because of the contractor’s work or actions. It may also be prudent to request a waiver of subrogation so that your contractor’s insurance carrier cannot recover money in the case of a paid loss.

Managing COIs

As soon as you have identified a contractor to engage, and before work has been given to them, it is important to collect the COI document. An issue can arise on the first day and failing to have confirmed the proper coverage is in place can be very costly. Whenever possible, it is more helpful to get an actual copy of the certificate of insurance than accept their word in good faith. It is important to review the actual document and ensure it contains the information required. This can be done by your organization, or by a trusted partner like PlusOne Solutions, and can be obtained from the contractor/servicing organization directly, or from the insurance broker who issued it. Asking for it from the broker may be more efficient, they are familiar with the requirements and insurance language and ensure the document is legitimate.

What to Look For on a COI

Before engaging a contractor, there should be an agreement or contract of some sort that both parties commit to. This contract should stipulate the minimum required coverage, limits, endorsements, and other requirements of the insurance coverage. Determining these criteria will be based on the level of risk in the relationship, the type of work being done, and the expected level of protection your organization needs. Ensuring these requirements are communicated is a key step in making sure the proper coverage is in place. It is also important to ensure consistency between all contractors engaged for similar work.

When reviewing the COI, there are some key features to focus on:

• Confirm the name on the policy matches the name on the contract/agreement
• Ensure policy types and limits match the contract/agreement. NOTE – it is acceptable for the coverage to exceed the contract
• Review policy effective and end dates to ensure they cover the period of the contract/agreement. Most policies are issued on a yearly term.
• Check for additional requirements– additional insured, endorsements

Many claims arise after work is complete and time has passed, so it is very important to retain the copies of insurance documents, even after they expire. Oftentimes, organizations need access to what is considered “old” COIs to obtain the insurance carrier information to file a claim. 

Consider Using a Trusted Partner

Managing COIs and certificate of insurance best practices is not simply a paper process that should be considered a formality. If there is any incorrect, or missing information on the COI, the risk to the organization increases as does the chances of a claim being denied. Working with COIs is a time-sensitive and ongoing process. Whoever is responsible for it needs to be on top of the process, understand the expiration timelines and process involved and be familiar with how to review policy documents effectively and accurately. A partner who reviews thousands of such documents a month can be a cost-effective option for keeping your COI management program on track. Additional benefits of using a partner are:

• Expertise in reviewing COIs. Insurance language and working with agents
• Centralized document management system for transparent and easy access to COIs
• Ability to match COI information to confirm compliance against your requirements 
• Reports on overall service network compliance compared to insurance requirements
• Monitor updates, cancellation notices, and follow up on policy expirations
• Automation of COI collection, review, and storage
• Verification that policy remains in coverage after initial check

Using the above criteria for certificate of insurance best practices will ensure protection for your organization against unnecessary claims and litigation and demonstrate to your customers and service network that you take risk mitigation seriously. 

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 has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.