Guide to Certificates of Insurance

What Is a Certificate of Insurance?

Just as auto liability policies come with an insurance card, certificates of insurance (COIs) accompany business insurance policies. These documents contain all essential aspects of your policy, and help to prove active status, mitigate risks, and enable easy reference.

COIs provide a complete snapshot of your insurance policy in one single form, which includes these important aspects: 

• Policyholder's Name
• Policy Effective & Expiration Dates
• Type of Coverage
• Policy Limits
• Policy Carrier

How to Read a Certificate of Insurance

At first glance, certificates of insurance can seem complicated. Let’s break down some of the most common terms you’ll notice on a COI, otherwise known as an ACORD form, and what they mean.

Feel free to watch the video above and download this sample coi below:

• Producer: The insurance agent or broker who supplied the policy
• Insured: The person, organization, or entity covered by the policy. Otherwise known as the “named insured.”
• Additional Insured: These endorsements cover people or entities in the event of claims and negligent acts. These parties usually have some degree of liability because of their relationship to the named insured.
• Coverages: Outlines the policies issued to the named insured
• General Liability: Covers liability if a business is sued for incidents that occur on its property, during or after completed operations, or because of its products
• Occurrence: One type of coverage protecting parties from incidents occurring during the policy period, regardless of when the claim is reported
• Claims-Made: Another type of coverage for claims that occur and reported within the policy period
• General Aggregate: The total amount an insurer is obligated to pay in a single term. They can respond in three ways: per policy, per project, and per location. 
• Per Policy: The maximum amount an insurer pays for the total of all claims covered by an insurance policy
• Per Project: Limits applying to each of the policyholder’s projects (commonly used by building and retail store owners)
• Per Location: Limits applying to each of the policyholder’s locations (commonly used by companies and contractors doing project work, such as in construction trades) 
• Automobile Liability: Covers policyholders who have suffered bodily injury or property damage from an auto accident that occurred on company property or with a company vehicle
• Auto insurance symbols include “Any Auto,” “Scheduled Autos,” “Hired Autos,” and “Non-Owned Autos.” “Any Auto” is most ideal because it means any vehicle the party drives will be covered.

• Umbrella & Excess Insurance: 
• Excess Insurance: Does not expand policy terms, but includes higher coverage limits in case of unforeseen, catastrophic claims or loss
• Umbrella Insurance: A form of excess insurance that does expand policy terms and extends coverage to losses not outlined in the policy 
• Workers’ Compensation & Employers Liability:
• Workers’ Compensation: Covers expenses resulting from workplace injuries, including medical care, lost wages, and rehabilitation
• Employers Liability: Pays for any lawsuits against employers resulting from employee injury or illness
• Other: Indicates if the named insured purchased other policies. This section is also where additional insured endorsements are listed.
• Description of Operations/Locations/Vehicles/Exclusions Added by Endorsement/Special Provisions: Any special operations or job sites where work will take place. Additional insured endorsements are also listed here.
• Policy Number: The number assigned to the policy at the time it was issued
• Policy Effective Date: When a policy begins
• Policy Expiration Date: When a policy ends
• Certificate Holder: Entities a COI has been sent to or shared with
• Cancellation: The amount of notice an insurer will give the named insured if the policy is canceled before its expiration date
• Authorized Representative: Someone who has been given authority to sign the COI, whether an insurance agent, broker, or representative

Types of COIs

There are numerous types of certificates of insurance (COIs) to be aware of. Let’s break down three of the most common:

1. Certificates of Liability Insurance

Certificates of liability insurance verify the third party holds an active insurance policy in the event a business is sued.

This not only protects property owners, but extends additional insured status to the property manager or lender. Reviewing these documents is key for ensuring loss transfer from the project owner to a third party during a claim.

As you’re reviewing certificates of liability insurance, look for the following to verify coverage is adequate:

• Additional insured status is extended to the right parties.
• There is a description of operations for the project.
• It contains a waiver of subrogation.
• Coverage is primary and non-contributory.

2. Certificate of Workers Compensation Insurance

Certificates of workers compensation insurance prove coverage claims resulting from workplace injuries, including medical care, lost wages, and rehabilitation.

These are written and required based on each state’s specific requirements and laws.

3. Certificate of Auto Liability Insurance

Certificates of auto liability insurance verify insured status for bodily injury or property damage claims resulting from an auto accident on company property or with a company vehicle. 

Track these for all vendor-owned, leased, non-owned, and hired vehicles.

Five Main Types of Insurance Policies

There are five main types of insurance policies listed on a COI, including:

1. General Liability: Covers liability if a business is sued for incidents that occur on its property, during or after completed operations, or because of its products
2. Automobile Liability: Insures policyholders who have suffered bodily injury or property damage from an auto accident that occurred on company property or with a company vehicle
3. Workers’ Compensation: Pays for expenses resulting from workplace injuries, including medical care, lost wages, and rehabilitation
4. Employers Liability: Covers employers in the event of lawsuits resulting from employee injury or illness
5. Umbrella & Excess Insurance:
1. Excess Insurance: Does not expand policy terms, but includes higher coverage limits in case of unforeseen, catastrophic claims or loss
2. Umbrella Insurance: A form of excess insurance that does expand policy terms and coverage to losses not outlined in the initial policy

What Is a Certificate Holder?

Certificate holders are parties a COI has been shared with to prove insurance status. 

These people or organizations are typically listed in the bottom left box of a COI labeled “Certificate Holder” or in the “Description of Operations/Locations/Vehicles/Exclusions Added by Endorsement/Special Provisions.”

While the certificate holder may be informed in advance of any policy cancellations, they don’t receive any other benefits or protection.

To return to our previous example, the business owner wouldn’t receive any added coverage or benefits from the kitchen cabinet subcontractor’s policy by being a certificate holder; only the policyholder and any additional insureds do.

Difference Between COIs & Insurance

While insurance policies are comprehensive documents reflecting your contract’s terms, coverage, and limits, certificates of insurance (COIs) are condensed versions of insurance policies.

COIs contain only the most essential aspects of these contracts with your insurance provider, such as the policyholder's name, effective and expiration dates, type of coverage, limits, and carrier. They do not modify coverage or alter the terms of the policy.

It’s important to note that property owners and others requesting COIs do not receive additional policy benefits from it. Only if they are listed as additional insureds under these policies will coverage be extended to them in the event of a claim.

Is a Certificate of Insurance the Same as a Declaration Page? 

No, it is not. A declaration page, also known as a “dec page,” is one of the first pages of your insurance policy, while certificates of insurance (COIs) are abridged versions of the contract.

In a declaration page, you might find:

• Policy Information
• Personal Details
• Coverage Scope, Types & Cost
• Policy Limits
• Deductible

COIs are more condensed, and contain information about: 

• Policyholder's Name
• Policy Effective & Expiration Dates
• Type of Coverage
• Limits
• Insurance Carrier

If you’re pulled over, you wouldn’t give the officer a copy of your declaration page to prove you have an active auto policy. The same goes for third-party partnerships.

When determining whether you’ll work with a vendor, you would verify each other’s insured status using COIs. To send a copy of yours, request it from your insurer, who should provide one for free.

What Is the Difference Between a Binder & Certificate of Insurance?

Have you ever been to the DMV to register your vehicle, and in the interim, they supply you a small slip of paper proving your registered status in case you’re pulled over?

That tiny slip of paper is somewhat like an insurance binder.

Insurance binders are temporary policies that fill the gap while you wait for your formal insurance policy to take effect. It can take underwriters anywhere from a few days to weeks to issue your new policy, so binders provide sufficient coverage and proof of insurance in the meantime.

Certificates of insurance (COIs), by contrast, are condensed documents reflecting all the pertinent details of your policy. After your contract is finalized, you might use COIs to verify insured status with potential vendors and for quick reference about the key aspects of your coverage.

Why Certificates of Insurance Are Essential

Beyond being a convenient way to condense all the pertinent details of your policy into one document, certificates of insurance (COIs) are essential for proving insured status, mitigating risks, and fostering safer partnerships.

1. Proves Insured Status

A summary of the insurance policy, COIs verify insured status without the bulk of the document itself.

2. Provides Quick Access to Information

Rather than rifling through stacks of pages within an insurance contact, COIs are an express version that provides more convenient access to information. 

3. Reduces Liability

By tracking COIs from all your third-party vendors, you can effectively transfer loss to their insurance carrier if something goes wrong.

4. Fosters Safe Partnerships

Vendor partnerships come with inherent risks, but by verifying each of their policies meets your requirements, you can mitigate non-compliance and build safer connections.

What Is the Purpose of a Certificate of Insurance?

While insurance policies contain information about your terms, coverage, and limits, certificates of insurance (COIs) are abridged documents reflecting the pertinent details of these policies.

Their main purpose is to provide proof of insured status.

When considering whether to do business with a third party, request a COI to verify their insured status, maintain compliance, and promote a safe partnership.

When to Ask for a Certificate of Insurance

As a rule of thumb, always request a COI from a contractor before they start working on your project.

Simply ask them to provide a copy from their insurance carrier, who should supply it for free. Anyone who is reluctant to do so could indicate there may be a deeper issue.

By verifying third-party COIs, you can mitigate risks, ensure coverage meets your requirements, and address any gaps with excess or umbrella insurance so your project runs smoothly.

How Long Should I Keep a COI?

Even after a COI expires, it is a good idea to hang onto it as a record of when your vendors were insured by a specific policy.

While the period of coverage may end on a particular date, the liability for incidents that occurred during that period remains long after the project is completed.

Archiving COIs can also come in handy during labor disputes regarding health insurance provisions, paid time off, and more to help an organization prove a contractor was not a full-time employee at the time of the incident.

For these reasons, a robust COI tracking process should include not only monitoring coverage for ongoing projects, but archiving documents from completed ones.

How to Spot a Fake COI

Just because vendors submit a COI that appears to comply, doesn’t mean your business is completely protected.

Unfortunately, some contractors forge certificates of insurance (COIs) to make it seem as though they hold the appropriate policies.

Not only is this illegal, but failing to notice the telltale signs of a forged COI can make you liable for any damages the vendors cause. 

Here’s how to spot a fake COI:

1. Missing Contact Information: COIs should include the insurer’s contact information, name, phone number, and address. Those that do not are likely forged, and designed to discourage you from contacting the carrier to verify its authenticity.
2. Poor Quality: Most hard-copy certificates are printed at the broker’s office in response to direct requests, so those that appear to be photocopied or low quality should be investigated further.
3. Inconsistent Font: Automated systems generate COIs with uniform fonts throughout. Inconsistent fonts, especially in the “Certificate Holder” and “Description of Operations/Locations/Vehicles/Exclusions Added by Endorsement/Special Provisions” sections could indicate forgery.
4. Information Is Whited Out: Any information that’s been whited out has likely been inappropriately altered. Look for shadows and shading on photocopied documents to gauge whether it’s been tampered with.

What Makes a Good COI Tracking Process 

Every organization's COI tracking process will depend on is unique needs, bandwidth, and other factors, but all effective strategies should contain the following elements:

• Be articulated in language
• Have support from senior management (CFO, risk manager, etc.)
• Establish clear lines of authority for collection, compliance review, and monitoring 
• Provide a clear documentation trail for each certificate, including corrective actions
• Be supported by COI tracking software or other tools
• Review, update, and audit processes for continuous improvement

How to Track COIs

Thirty-six percent of small businesses with directors and officers (D&O) liability coverage experienced a claim in the last two years, with an average cost around $120,000 and the highest in the millions.

Yet the majority of companies do not have formal COI tracking protocols in place, and those that do tend to overburden staff.

Having a well-defined process that’s transparent, supported by software, and updated as needed is key to any organization's success.

Here is how to track COIs:

1. Collection & Storage: Collect certificates from every third party and safely store them in a secure database or other location for easy maintenance.
2. Analysis: Assess whether the terms and conditions meet your requirements, and monitor documents for any changes.
3. Correction: If any information is inaccurate, contact the insurer to request an updated policy. We estimate seven out of 10 COIs are noncompliant, and require around three follow-ups to correct them.
4. Follow Up: As policies may expire and vendors may switch insurers, it’s always a good idea to request the most updated information. Also, follow up before insurance renewals to prevent lapses in coverage.

Why Track COIs? 

Tracking COIs is one of the most important aspects of any organization's risk management strategy.

Let’s take a look at several key advantages of doing so:

1. Confirms vendor compliance with financial requirements
2. Makes it easier to adjust claims in the event of a loss
3. Minimizes insurance costs during audits and protects businesses against potentially millions in claims each year
4. Ensures vendors are compliant and can continue working on job sites—improving productivity and project completion
5. Minimizes coverage lapses via automated alerts about approaching policy end dates
6. Provides valuable insights by highlight coverage gaps and centralizing data
7. Mitigates evolving risks organizations face as vendors, project scopes, and conditions change over time

For more about this, download our free white paper.

Should I Be Tracking COIs?

Anyone who owns or operates a business, commercial property, or other site and works with third-party contractors should be tracking certificates of insurance (COIs).

These abridged documents reflecting all pertinent details of an insurance policy are key for mitigating risks, ensuring compliance, and building safer business connections.

Depending on your company’s needs and bandwidth, you might choose to track COIs in-house or work with a team of insurance specialists.

Verifying COI Compliance

When tracking COIs to verify vendor compliance, there are several factors to consider, including:

• Contract Requirements
• ACORD Forms & Standards
• Insurance Policies
• Endorsement Language
• Workers Compensation Regulations

Consider designating one person with experience in compliance and/or insurance management to collect COIs, and leverage their expertise to review contracts, understand language, and translate the information.

However, if your team doesn’t have the bandwidth to tackle this, consider partnering with dedicated COI tracking analysts.

Doing so also mitigates the potential for guesswork, “tendering” or pushing claims due to non-compliance, and other risks.

For more about navigating insurance tracking and vendor risk management, download our free guide: “The 9 Fundamentals of Vendor Insurance Review”.

Common COI Tracking Challenges

Whether you’re managing COIs in-house or working with a provider, COI tracking comes with a unique set of challenges. Let’s review them: 

1. It’s time consuming.

There’s no way around it. COI tracking processes can be tedious and time-consuming, often involving:

• Requesting and following up with vendors to acquire documents
• Manual data entry
• Detailed analysis to ensure you’re fully protected
• Notifying tenants about cancellations or renewals to prevent policy lapse and ensure continuous coverage as policy scope changes

2. It can be more expensive than outsourcing.

Beyond the productivity hurdles involved with manual tracking, it can also be costly. 

Instead of managing these processes in-house or hiring new staff, it is often more cost effective to work with a COI tracking company.

3. Risk analysis is complicated.

Once you compile the necessary COIs, then comes the complex process of analyzing and collating documents to assess and mitigate risks.

This can be challenging, and often requires input from someone with experience in insurance and compliance management. 

4. Expertise is essential.

Not only does working with a COI tracking company help you navigate complex subjects, but it lightens your staff’s workload. 

Instead of saddling your employees with insurance management—or, hiring new ones—working with a dedicated team of tracking specialists offloads these tasks so you can get back to focusing on your day to day.

Tracking COIs In-House

Tracking COIs in-house is accompanied by several important considerations. 

Whether you’re utilizing an Excel template or integrated software, keep in mind the following questions to ensure you’re tracking COIs correctly:

1. Is keeping this process internal saving my company money?
2. Could our employees be better using their time to accomplish other projects and work that contributes to our bottom line?
3. Do I know how compliant my vendors are?
4. Do we have team members who are comfortable enough with insurance terminology to correct deficiencies and manage compliance?  
5. Will our current COI tracking process be able to accommodate hundreds or even thousands more vendors if the company grows?

If you’re tracking COIs in-house, consider using the following free resources:

• The International Risk Management Institute (IRMI)
• bcs University
• Email & Task Manager Platforms
• QuickBooks
• bcs's Certificate of Insurance Tracking Template
  

You can also try bcs's COI tracking software for FREE.

Working With a COI Tracking Company

While tracking COIs in-house might be a viable option for small businesses, growing companies can benefit in several ways from outsourcing these processes.

Working with a COI tracking company helps organizations:

1. Leverage Dedicated Teams of Compliance Analysts
2. Streamline COI Storage, Correction & Maintenance
3. Offload Compliance Responsibilities
4. Get Back to Running Their Business

Ultimately, the decision to offload these responsibilities usually depends on a few factors, including: 

• The size of your company 
• The availability of internal resources
• Knowledge and/or training of employees
• The number of vendors and contractors you work with
• The financial risks your vendors and contractors pose

Finding the Best COI Tracking Solution

If you decide to work with a COI tracking provider, the next question is: Do you need a full-service or self-service solution?

• Self-service tracking includes robust software your team can use to store, manage, and track COIs. However, while these intuitive platforms help streamline compliance and safeguard vendor information, they require staff to manage them.

• Full-service solutions come equipped with a team of insurance specialists to handle every facet of COI tracking for you. Along with the benefits of managing these processes in a secure environment, full-service tracking provides access to dedicated compliance expertise so you can free up your teams, mitigate risks, and enable projects to run smoothly. 

To decide whether self- or full-service COI tracking is right for you, consider the following factors:

• Self Service:
  • Small Businesses
  • Low, Manageable Vendor Volume
  • Sufficient In-House Insurance Knowledge
• Full Service:
  • Medium-to-Large or Growing Businesses
  • Large Vendor Volume
  • Hands-On Approach & Expertise

For more information on finding the best COI tracking solution, download our free guide.

Is There Free COI Tracking?

Businesses naturally seek to reduce expenses wherever they can, so many will explore managing these processes in-house.

However, no COI tracking solution is ever truly free.

If tracking in-house, one or more team members must dedicate time and resources otherwise spent on revenue-generating activities—and these only become more time consuming as companies grow and partner with more vendors.

If outsourcing to a COI tracking solution, there are, of course, costs associated with the software and access to a team of experts.

To gauge how much your current solution is costing you, use our free ROI calculator tool.

That’s not the only service we provide as you explore your COI tracking options. We invite you to test out our user-friendly COI tracking and vendor compliance software for free!

In addition, there are several free tools you can use to support in-house tracking, including: 

• The International Risk Management Institute (IRMI)
• bcs university
• Email & Task Manager Platforms
• QuickBooks
• Professionally-Made Spreadsheets

What Is COI Tracking Software?

Instead of organizing, filing, and manually tracking stacks of insurance documents, automated COI tracking solutions streamline every facet of vendor management processes.

Some robust software enable you to easily chat with third parties, store documents, award bids to pre-vetted contractors and so much more—all from one integrated platform.

As you’re considering the right solution for you, look for software offering these capabilities:

• Secure, Cloud-Based Storage: By storing all your vendor assets digitally, you can easily retrieve and correct documents, and protect sensitive data.

• Automated Emails: Some solutions enable you to automatically create email templates and send renewal messages for a seamless return to compliance.

• AI Software & OCR Scanning Tools: These extract data directly from your COIs, saving you time and reducing manual tasks while helping you run your projects more smoothly.

Also, consider not only modernizing your vendor management processes with the right software solution, but managing it through a COI tracking company.

With this combination of automation and expertise, you can minimize human error, save time and resources, and easily maintain compliance.

How Much Is COI Tracking Software?

Ultimately, the cost of COI tracking software varies by provider and service offerings. 

For instance, bcs offers two solutions priced to suit different needs and budgets:

• Self-service tracking comes with a robust software platform that empowers your team to fully manage COI tracking in-house.

• Full-service solutions include a dedicated team of analysts to handle all your compliance needs.

As you’re deciding which option is right for you, consider your company’s requirements:

To gauge how much your current solution is costing you, use our free ROI calculator tool.

Excel Template vs. COI Tracking Software 

If you’re opting for in-house tracking, the next question is: Should I use an excel template or COI tracking software?

• Manual Excel templates contain basic business information, COI expiration dates, compliance status, and other essential details.
• COI tracking software automates this information using a streamlined platform that sends compliance deficiency alerts, securely stores documents, and enables you to message vendors in real time.

While both can be managed in-house, COI tracking software requires far less manual upkeep, provides enhanced security, and streamlines compliance.

Automated COI tracking solutions such as bcs also include various capabilities, such as:

• Secure, Cloud-Based Storage 

• AI Software & OCR Scanning Tools  
• Onboarding Tools
• Automated Renewal Notices & Deficiency Alerts 
• Pre-Qualified Vendor Database 
• Request for Proposal (RFP) Automation
• Integrated bcs App 

To learn more about both options, download our free COI tracking template or watch the bcs software demo.