Did you know that half of the small businesses in existence today are caught up in litigation? Did you also know that almost all businesses, regardless of size, are bleeding their operational budgets dry due to court settlements and paying for damages? All of this because of a lack of an updated COI. 

So, is your business in the same boat? 

Are you going to wait for this to happen to you? 



Now that we have your attention, let’s find out how we can keep you out of legal trouble while operating your business as efficiently as possible.  

Today we’ll find out what Certificates of Insurance (or COIs) are, what they can do for your business, and why you absolutely need to have an efficient means to track it.   

So, what is a Certificate of Insurance? 

In a nutshell, a certificate of insurance (COI) is a document that has all of the essential details of your insurance policy.  

It’s a snapshot of your policy and it has all of your important information on it.  

It is not your policy per se. A COI presents your policy on the surface level. Your policy has more details which cannot be fully depicted in one piece of paper. In fact, actual insurance policies can run up to a hundred pages long denoting every aspect of the coverage.  

You wouldn’t want that handed over to you each time you hire a contractor or vendor. Think of all the man hours needed just to pore over the details of their coverage before the work begins. 

A COI helps you do away with all of that and just shows you what is important on the surface so you can get started on your project. 

Here’s what you’ll normally find on a COI: 

  • Policyholder’s Name 
  • Policy Effectivity Date 
  • Type of Coverage 
  • Policy Limits 

A COI serves as proof that you have insurance but gives no other further rights to whomever holds it. What is still considered in full effect is what’s depicted in the policy itself. Changes made to the policy are not immediately reflected on the COI you have on hand. You will have to request the revised COI if your contractor or vendor says they have made changes to their existing policy. 

Last, but not least, a COI isn’t an Auto ID card. Those are generated for each individual vehicle covered under the policy. There is a unique set of numbers for that. 

So is it just a glorified piece of paper? 

Despite what’s been discussed above, here are reasons why COIs are essential and more than just a piece of paper: 

  • A COI proves you have an active insurance in place 
    • As stated above, a COI is proof that you have an active insurance policy. It assures the requester without having to leaf through an entire policy that could reach up to a hundred pages long. 
  • A COI summarizes your insurance policy into a digestible chunk of information 
    • A COI compresses your current insurance policy into a bite-sized snapshot to make it easier for review. This saves potentially hundreds of hours per year for both the requester and policy holder.  
  • Reduces your liability and potential losses from damages incurred 
    • carefully documenting COIs reduces the risk of loss and transfers that to a third-party insurer in the event of a setback. 
  • Provides protection when you outsource services 
    • Outsourcing services is a good solution for any company wishing to increase their productivity and efficiency without affecting the bottom line. It does come with a unique set of problems. Having a COI provided by the third-party service providers minimizes your risk of loss and litigation.  

Certificates of Insurance are issued by an insurance company to both the requesting contracting organization and the contractor or vendor. The COI will hold information that is in effect at the time of request. Any changes to the policy will require a new request of issuance from both the contracting organization and vendor/contractor. 

Five main types of insurance policies: 

There are five main types of insurance policies that you need to be aware of. These are the five: 

  1. General Liability Insurance (also known as Business Liability Insurance) – this protects your business from general claims including physical injuries and property damage resulting from usage of your products, services, or other operations related activities.
  2. Auto Liability Insurance – in the event that you wind up in an accident, this type of insurance covers the costs of the other driver’s vehicle and/or any physical damages they may have suffered. It can also cover loss of wages and/or legal fees if a lawsuit is involved.
  3. Workers Compensation – workers compensation insurance is different from disability insurance or unemployment income. This type of insurance only covers the individual if they are injured during the course of their normal proceedings while on the job. Disability insurance covers the individual regardless if they were injured during work or not. Unemployment income on the other hand is given if and when the individual files for it regardless of the nature of the reason leading to the situation. This means that the unemployment status may or may not be related to an injury. Accepting workers compensation benefits waives the individual’s right to sue their employer.
  4. Employers Liability – this is often times packaged with workers compensation to cover the costs incurred when an employee is injured, falls ill, or dies during work hours.This covers legal costs and places a limit on the amounts paid out to each employee on a per incident or per policy condition.
  5. Excess/Umbrella Liability – excess or umbrella liability insurance covers you and other members of your family or household. It is designed to take care of what sits outside your policy coverage. 

When Should You Ask for a Certificate of Insurance? 

The best time to ask for a COI is before any actual work starts. Ask your vendor or contractor for one to ensure that any liability arising from bodily injury, property damage or even death can be covered by a third-party insurer. This also includes substandard output, work delays or failure to complete the project which could affect your business in a negative manner. 

Do not start a project without a COI submission from your contractor or vendor. Once received, verify the existence of the policy and log it into your COI tracking system to ensure you are updated. 

Any failure in part of your contractor or vendor hired can severely impact your business’ bottom line and/or affect your general liability and excess/umbrella liability if a lawsuit should arise. 

Why is it Important to Track COIs? 

As a contracting organization, it is in your best interest to track COIs to ensure they are updated or current to reduce the risk of litigation or risk of losses on your end. 

You have to understand that as a contracting organization, the contractors working under you, serving your clients, still fall under your scope of responsibility. 

Any failure to comply, substandard work, and other negative work-related activities they produce will still fall under your obligation to fulfill your contract with your client. Should your client sue for damages incurred as a result of lackluster performance, you will have to shoulder it. 

Let’s say a contractor working under you is involved in that complaint, if their COI isn’t current, they can be absolved of any obligations to comply simply because what’s on paper states they are not covered. This then falls on you and unless you have a pretty comprehensive coverage policy, chances are, you’re in for some huge losses. 

A contractor who also continues to work for you with a lapsed COI can make demands that could negatively impact your business. 

You need to stay on top of this with the help of an efficient COI tracking system and a vigilant risk manager.  

Enter COI Tracker 

COITracker.com handles the collection, verification, and reporting of COIs for you. This is a powerful certificate tracking system that scans, reads, captures, and organizes items automatically. It also gives you a notification for COIs that need renewal or have changes applied to it. 

This keeps your COIs organized, reducing the wasted hours and frustrations attached to dealing with Certificates of Insurance. 

Save yourself the headaches and the hassle, give us a call today or check out our website for more info on this product.