Certificates Of Insurance Best Practices

August 14, 2023

If your business works with a lot of contractors, subcontractors, vendors, and third parties, you likely are very familiar with insurance compliance. Your company may have stringent insurance requirements for all third parties you work with, and for any third parties that they may subcontract out to help with the job.

Requesting proof of this insurance through Certificates of Insurance (COIs) is the best way to keep track of this insurance compliance, which can protect your own business from potentially costly claims. But, what is the best way to gather and track these COIs, and what should you be looking for?

Below, we present the Ultimate Guide to Certificates of Insurance (COIs), which will help you get ahead of any potential issues that could possibly arise from having contractors out of compliance — or not having a plan on how to manage it all.

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

Just like there are many different types of businesses and types of insurance policies that these businesses might have, there are also a lot of different ways that you can handle contractor COIs. 

Some companies will handle the process manually, especially if they don’t work with a lot of outside companies. Others will use helpful tools such as spreadsheet programs so all the information is in one place. Others, still, will use powerful software platforms that handle much of the tracking for them, such as Evident’s great platform.

No matter how you track COIs, though, you must first understand what they are, what they include, and why they’re important.

What is a Certificate of Insurance (COI)?

A Certificate of Insurance (COI) is a document that lays out the insurance coverage that a policyholder has. Because it shows this coverage, it is often referred to as a proof of insurance document.

Listed on the COI will be the policyholder’s official name and address, the type of insurance policies they hold, the effective dates and coverage amounts of those policies, as well as the name and contact information of the insurance carrier.

At the bottom of the COI, the Certificate Holder’s name and contact information will be listed, too. This entity is the one who requested the COI. So, for instance, if you are requesting a COI from one of your contractors, then you will be the Certificate Holder.

Types of Certificates of Insurance

There are many types of Certificates of Insurance, based upon the type of insurance that you are requiring and want to verify. This includes …

  • General Liability: This insurance provides overarching coverage for a business’ practices. It protects against general damage and injuries caused by the policyholder, as well as some other items.
  • Commercial Auto: If a business uses company vehicles, then it will likely have a commercial auto policy providing coverage. You can get a COI for this type of coverage if you require it from your vendors.
  • Workers’ Compensation: This insurance pays workers who get injured or sick while on the job site, helping to pay for their associated medical bills and any lost salary.
  • Product Liability: If the company sells products, this insurance plan would provide coverage in case a customer is injured or gets sick from using it.

There are many other types of Certificates of Insurance, too. What COI you will request from your contractors will depend on the insurance you require for the job.

Blanket Additional Insured Wording On Certificate Of Insurance

Sometimes, your contractors may hire subcontractors to handle certain aspects of the job. When they do, you want to make sure that these subcontractors are covered under your contractors’ policies.

This is done often through additional insured documentation. If your contractor uses blanket additional insured, you want to make sure the wording on the policy provides coverage for all subcontractors that you are comfortable with. They won’t be specifically listing all the subcontractors as additional insured, so just double-check that everyone will be sufficiently covered.

Understanding COIs

Knowing what to look for and request on COIs and insurance policies is important if you want to protect your business. Here are some of the top tips for doing so.

Get an Updated Certificate at Renewal

When you receive a COI from a contractor, make sure to note when the policy is set to expire. Then, be proactive and request a new COI at renewal. This will ensure that you always have the most recent information on file and that the new policy is still in compliance with your requirements.

Sometimes, even if an insurance policy is just renewed, some of the language in the policy — or the coverage itself — might change.

Look Over the Certificate Immediately

Before you file the COI, make sure to read through it. You want to make sure that your contractor’s name is written correctly, and that the insurance types, coverage limits, and expiration dates meet your requirements. If something is off, you can reach back out to the policyholder to address the issues.

Consider your options upon cancelation or expiration

If the policy is canceled or expired, you’ll need to determine what you should do with your contractor. It’s a good idea to have this in writing before the contract even starts, so there is no confusion and no chance of liability falling upon you.

You could either halt the job until the proper insurance policy is in place, or you could cancel the contract altogether.

Business Insurance

When you read over the COIs, make sure that the proper business insurance is in place for the job. Before you even put your requirements in place, it’s a good idea to thoroughly analyze which type of business insurance you want your contractors to have.

Assess Endorsements

The COIs will also list all additional insured endorsements. If they aren’t listed — but you know there will be subcontractors on the job — now is the time to figure out why they aren’t listed. 

If the endorsements aren’t listed properly, it could result in costly liability for your business.

Certificate Of Insurance Tracking Template Excel

A good place to start tracking COIs is through a simple Excel spreadsheet. There are many free templates that you can find online, or you can create one from scratch to meet your needs.

Working in Excel will allow you to easily sort by company name, insurance type, coverage limits, and/or expiration dates. This will give you a place to store all of the information for your COIs in one place.

Consult an Insurance Professional

When you’re deciding which insurance policies to require of your contractors, it’s a good idea to reach out to an insurance professional. Since risk can vary widely among industries, it’s always advisable to get an expert’s insight into where your risks may lie, and how you can prevent them.

Work with Evident to Track Your COIs

Tracking COIs can be an arduous task, especially if you have a lot of jobs where you’ll work with multiple contractors. While Excel is a great place to start if you’ve never done it before, there are shortfalls in relying only on that program.

Evident offers an in-depth and impressive software platform for tracking COIs that simplifies the process and helps you never miss a beat. Contact us today to find out more.

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