So, you managed to collect certificates of insurance (COIs) from your vendors without a hitch. Congratulations! But don’t go thinking that your job is over just yet. Far from it: you’ve only just begun.

One of the most common misconceptions of compliance teams and personnel across the board is that COIs are wholly reliable documents that summarize every policy term on an endorsement. It bears repeating, but COIs are not meant to be substitutes for actual endorsements, hold no real legal weight, and are accurate only during its date of issue. (Read more about COIs here.)

If the only thing you’re reviewing at the moment are COIs, you’re effectively asking for trouble. COIs do not always contain valid information, and rarely include all the relevant details of an endorsement for that matter. Inaccuracies on the record increase your risk exposures – but wasn’t the entire point of compliance tracking to reduce them?

4 Things No One Tells You About COIs

4 Common Issues with COIs

Just having a COI doesn’t amount to much protection. Here are four reasons why that is:

1. COIs Can Be Easily Faked

Since COIs are not legal documents, they can be faked with ease. A quick google search can easily net you a clean copy of a certificate of insurance, and a desperate-enough vendor can use that to submit a fraudulent cert on your desk to hide the fact that they are underinsured, if not uninsured. More on fraudulent COIs here.

A big part of your job as part of the compliance team is to make sure that the COIs you receive are valid, and this requires a lot of verification. One way to avoid getting fake certs is to make a request to the Insurer directly, instead of leaving it to the vendor/contractor. This will eliminate this problem half the time. Another is to make sure that the vendor’s name matches the company named in the cert to the last dotted I. “Miles Builders, Inc.” and “Mile Builder, Inc.” may sound similar enough, but as far as policy coverage goes, only one of them is insured.

2. The DOO is Far from Error-Free

Okay, so you got your COI from the Insurer directly this time. But that still offers no guarantee of accuracy. The “Description of Operations” box on the ACORD 25 form still leaves too much leeway on the part of an Agent or Insurance Agency Admin to paraphrase or free-form the inclusions to the point of error. For example, it may generalize specific inclusions in a way that it’s misunderstood as having broader coverage than it has.

There is no regulatory body to rule against carelessly written DOO. The only rule is if it doesn’t clearly contradict or misrepresent the policy terms, you can put anything in it. The worst part: the info here will be used in court in the event of a claim, regardless of what the endorsement actually says.

3. Literally Anyone Can Issue a COI

Again, COIs are NOT legal documents, which means, anybody can issue a COI so long as they work under an Insurance Firm. Anybody. They don’t require any specialized training or insurance background to fill up an ACORD 25. It can be some employee from the mailroom, or worse, some poor intern asked to release COIs during his downtime from all the coffee he’s been making.

That means COI issuers don’t always have the insurance know-how to understand all the terms, as well as the consequences for using the wrong term or phrase. If they somehow manage to confuse “Act of God” with “Accident,” you’ve got trouble in your hands.

4. COIs Expire

As stated earlier, COIs are only accurate only up till their date of issue. The Insurer and Insured could end their relationship the day after, and you would be none the wiser. When dealing with COIs, you need to be proactive in keeping track of the expiration dates, as well as in checking if the Insured’s policy will last through your contract. An expired COI will be as much use to your risk management program as carrying water to the sea.

Don’t Let COIs Be Another Risk, Use COI Tracker

Granted that COIs are far from regulated, you should do your part and read other supporting documents like waivers of subrogation and other endorsements. You should also be proactive when it comes to following up on your Insured on their compliance. But with so much to do, how else are you to handle the rest of your tasks?

That’s where COI Tracker comes in. By freeing your hands from the more menial duties of data entry and certificate and endorsement collection, you’ll have more than enough time to go over the rest of your tasks carefully and see if there are gaps in coverage that you may have missed. Try COI Tracker today and effectively cut your firm’s risks down to size.