Most business activities come with a high degree of risk. To minimize it, companies or organizations may obtain a certificate of insurance (COI) from an insurance company, outlining the coverage they have and expected outcomes.<\/p>\n\n\n\n
Aside from answering the question: \u201cWhat is a COI?\u201d this article discusses its importance and the types of COIs you can get.<\/p>\n\n\n\n
A COI in business protects your company from specific occurrences defined in the terms of the insurance program. If you\u2019re considering a partnership with another company, the COI also serves to give everyone peace of mind, as it represents reassurance that financial losses<\/a> would be minimal should the collaboration fall through.<\/p>\n\n\n\n COI documents contain all the essential details of your insurance policy in an easy-to-digest format. This information includes the details of the protected parties, the types of losses covered, the dates during which the policy is effective, and policy limits.<\/p>\n\n\n\n There are several reasons organizations get and request COIs. These include: <\/p>\n\n\n\n A business certificate of insurance proves to clients that the company in question is insured. A reputable company should always be insured, and having your COI ready is one way to maintain that reputation.<\/p>\n\n\n\n Hiring additional workers<\/a> outside of your organization<\/a> comes with various risks. COI compliance is vital here, as it prevents you from rendering your insurance coverage void, even if your contractor is at fault. Make sure to only create contracts that adhere to your COI and the contractor\u2019s.<\/p>\n\n\n\n Examine the COIs from potential partners carefully: In some cases, you can transfer your losses to the other party if things go wrong, and if your COI is not watertight, it might be able to do the same to you.<\/p>\n\n\n\n Lastly, a COI policyholder can obtain the information to prove its insurance status rapidly, saving itself lots of time and administrative snags.<\/p>\n\n\n\n COIs are generally required whenever one company cooperates with another. For instance, if you run a toy store and supply products made by third-party manufacturers, you need guarantees their coverage is good enough to protect you and your customers should something go wrong.<\/p>\n\n\n\n The same principle applies to running a bar: For example, if a brewery supplies you with bad ale, you need to make sure your COI or their insurance protects you if the potential injured parties decide to sue you for damages.<\/p>\n\n\n\n The number of COIs you need to ask for can be pretty high during the regular operation of your business. A bar, for instance, may require COIs both from product suppliers (such as breweries), as well as ancillary service providers, such as cleaning agencies, marketing firms, and even interior designers.<\/p>\n\n\n\n When you request a certificate of insurance for business, you\u2019re not saying that you don\u2019t trust your partners. Instead, you\u2019re doing something that minimizes risk, and you should ask them to do the same. Even if you\u2019ve worked with a company many times before, getting a COI is still a good idea every time you sign a new contract. This way, you prevent anyone from taking unnecessary risks.<\/p>\n\n\n\n There are three relevant entities in any certificate of insurance for a small business: The policyholder, certificate holder, and additional insured.<\/p>\n\n\n\n The policyholder is the entity that originally took out the policy. For instance, it could be a builder, or building company. The certificate holder is the person who requested the COI. This could be a subcontracting firm working with the builder, perhaps a plumber.<\/p>\n\n\n\n An additional insured is a business or entity that benefits from one of the signing parties\u2019 insurance, but has not paid for it directly. This category of entities can make claims under the policy, even though it did not purchase it. <\/p>\n\n\n\n To reduce risk exposure, certificate holders will often ask policyholders to provide the details of additional insured parties, or request to be named as additional insured on the policyholders’ document.<\/p>\n\n\n\n In some cases, COIs offer \u201cblanket insurance.\u201d These terms provide all third-party partners (as defined by the terms of the insurance document) with coverage, negating the need to manually add additional insured entities.<\/p>\n\n\n\n In most cases, the COI cost is zero. Insurers typically offer it as a complimentary service. If insurance brokers attempt to charge your for COI issuance, you may want to go with a different provider.<\/p>\n\n\n\n Be mindful that you may need to pay additional fees if you request policy changes to cover your new circumstances. As usual, the greater the coverage you have, the higher your premiums.<\/p>\n\n\n\nDo I Need a COI?<\/h2>\n\n\n\n
Proving Their Insurance Status<\/h3>\n\n\n\n
Outsourcing Protection<\/h3>\n\n\n\n
Reduces Liability<\/h3>\n\n\n\n
Information Access<\/h3>\n\n\n\n
Who Needs a COI?<\/h2>\n\n\n\n
What Is an Additional Insured?<\/h2>\n\n\n\n
How Much Does a Certificate of Insurance Cost?<\/h2>\n\n\n\n
How To Get A Certificate Of Insurance<\/h2>\n\n\n\n