Understanding Certificates of Insurance (COI) and Endorsements
For employers who collaborate with contractors, vendors, or third-party service providers, encountering the terms Certificate of Insurance (COI) and endorsement is common. However, they serve distinct purposes that are crucial for protecting your business from potential risks and liabilities. Do you know if a COI is enough, or should you request an endorsement? This blog post aims to break down the key differences between COIs and endorsements, elucidate why each matters, and provide actionable steps for employers.
What is a Certificate of Insurance (COI)?
A Certificate of Insurance (COI) is a summary document issued by an insurer that confirms a business or individual has active coverage. This document typically includes the following details:
- Policyholder’s name
- Coverage types (general liability, workers’ comp, auto, etc.)
- Policy limits and effective dates
- Insurer’s contact details
Requesting a COI before engaging with a third party ensures that they have the necessary coverage in place, which reduces liability risks for your business.
Understanding Endorsements
An endorsement, also known as a rider, is a modification to an existing insurance policy. It can add, remove, or alter coverage terms. Common examples of endorsements include:
- Increasing policy limits
- Adding an additional insured (such as listing the employer on the contractor’s policy)
- Expanding protection to cover new risks
Endorsements ensure that coverage aligns with specific needs, especially when additional protection is required beyond what the standard policy provides.
Key Differences: COIs vs. Endorsements
Understanding the clear distinctions between a COI and endorsements is essential:
- A COI serves as proof of existing insurance but does not alter policy terms.
- An endorsement legally modifies a policy and can add or remove coverage.
Employer Best Practices
Consider the following actionable steps to ensure proper coverage for your business:
- Always request a COI before engaging contractors or vendors.
- Review COI details carefully, checking policy limits and expiration dates.
- If additional coverage is needed, request an endorsement to ensure proper protection.
Understanding COIs and endorsements is vital in business contracts. A COI confirms coverage, but an endorsement ensures that the coverage meets specific needs. Employers should carefully review their insurance requirements and consult with a qualified insurance professional before hiring third parties.