The entire reason why you’re collecting certificates of insurance (COIs) is that you’re operating under the assumption that you’re listed as an Additional Insured on your vendors’ policy agreements. But what if you’re not?
Have you ever considered that possibility before? Well, to answer the question, the whole COI collection thing becomes a moot point, since there’s no actual policy since there’s no actual policy to indemnify you, and your COI is most assuredly fake. But how do you miss out on a detail like that anyway?
‘Additional Insured’ Means You’re Safe
Before we get into that, it’ll be good to discuss what the Additional Insured status does and what it means for the uninitiated. To put it simply, Additional Insured is a status conferred by general liability insurance policies to a particular person or company, in particular, to indemnify them if a claim has to be made. With an Additional Insured endorsement in place, some of the privileges enjoyed by the Named Insured are extended to a third-party, to clear them of financial liability during specific scenarios.
One of the main reasons why COI collection is standard fare is that it acts as a voucher of your Additional Insured status on your vendor’s policy. In fact, it’s a fairly common condition in most contracts where some measure of risk management is discussed. Being an Additional Insured means you’re protected from liabilities that might come directly or indirectly as a result of your vendor’s poor performance, operations, or negligence. And COIs – despite having no legal weight whatsoever – are a pretty convenient way to tell whether or not you’re an Additional Insured on your vendor’s policy.
You Need to Check More than Just the COI
This actually brings us back to the question earlier: how do you miss out on the fact that you’re not actually covered by your Insured’s policy? Simple: if you rely just solely on your COIs to verify your status. We have already established that COIs are not legal documents, so it shouldn’t come as a surprise that there are no regulations or sanctions that would prevent anyone from submitting misleading false or inaccurate information. More desperate firms may simply just send in a forged COI in hopes that you would let them begin work and finish before you notice.
As time-intensive as it is, you have to request for and painstakingly leaf through endorsements to the policy, or you put your entire organization in jeopardy. First of all, a COI with your name on it doesn’t automatically include you as an Additional insured in the actual policy. Next, COIs are only accurate on the exact date and time that they are made. A vendor may cancel their policy an hour after you receive your COI, and you won’t know a whit about it.
You can’t just assume that you’re covered. You need to go through the motions and request a COI from every vendor, AND an additional insured endorsement form certifying that you are, indeed, an Additional Insured. Requesting a copy of policy declarations to read about exclusions and limitations to find about the extent of your actual coverage certainly wouldn’t hurt.
COI TRACKER is an End-to-End COI Tracking Solution
Will this eat up your time? Significantly, for sure. And yes, you’ll have to do that on top of your other compliance duties like following up on vendor compliance and collecting COIs, among other things. And that is why you need a robust COI tracking solution like COI Tracker to automate the mundane and time-intensive parts of your job and leave you more time to verify everything effectively, with as little distraction as possible.
Request a demo today and significantly reduce the window of risk when it comes to costly legal battles and general liability claims.