A certificate of insurance (COI) provides verification of coverage and typically contains information on the various types and limits, insurance company, policy number, named insured, and effective periods. Clarity is king, because everyone expects accurate representation. For enterprise-level clients with massive liability concerns, simply keeping pace is not enough, however. To eliminate risk, you should strive to improve your compliance rates.
Collecting and tracking proofs of insurance is always critical for any company looking to hire third-party vendors and subcontractors. A recent boom in the so-called "shared" and "gig" economies supports rampant third-party outsourcing—making diligent COI tracking more important than ever.
There are several sometimes elusive factors to consider when checking your business for COI compliance. First off, it's vital that whoever audits your certificates of insurance for compliance is disciplined, experienced, qualified, and has a working knowledge of the following:
- Contract Requirements (Who is indemnified and under what conditions?)
- ACORD Forms and Standards (An ACORD form is a frequently used, standardized COI document.)
- Insurance Policies (Different types of policies include general liability, workers’ compensation and auto.)
- Endorsement Language (An endorsement is an addition to an insurance policy that modifies it in some way. Additional insured endorsement is one type particularly prevalent in insurance policies.)
- Workers Compensation Regulations (Workers' compensation law varies from state to state.)
Proactive COI Compliance Approach
The inability to obtain insurance coverage due to COI non-compliance could be a very costly misstep, as it's not unusual for verdicts and settlements to reach seven-figure amounts. In an effort to increase your COI compliance there are several things to always keep in mind to avoid the aforementioned messy situation.
Staying on top of policy expiration dates and carefully reviewing certificates of insurance and endorsements is critical for maintaining compliance across all your third-party vendors. Therefore, being able to quickly gain access to your compliance status and fully understand your company’s weak spots avoids a reactive approach to potentially problematic situations.
Looking at COI compliance as a protection from significant risk puts the importance of maintaining a high compliance rate in proper focus. Simply keeping up with COI compliance isn’t enough, however. To maximize the value of their human resources, smart companies are always looking to streamline their compliance-related protocols.
4 Tips to Increase Compliance
1. Use clear contract language. With so much at stake, there is no room for capricious language in your insurance contracts. A qualified insurance professional should review all COI documents and contract requirements before you enter into any contracts with third-party vendors.
2. Enact effective internal policies and procedures for document collection, tracking, and correction. It isn’t enough to merely collect certificates of insurance. They should also be tracked for continued compliance, and if non-compliance should arise, there should be systems in place to have those discrepancies corrected.
3. When in doubt, don’t hesitate to contact the vendor (agent), or the vendor’s broker or insurer. Getting compliance is especially about the ability to go back and forth with your vendors to address deficiencies that have been identified. The importance of the corrective process cannot be overstated: it is the key to COI compliance.
4. Implement a centralized tracking system. These days, technology makes it easy to grow a booming business and still remain compliant. If your team is overburdened with administrative duties, consider implementing a software solution to centralize the process, and mitigate risk.
And Yes, There’s an App for COI Compliance.
The BCS App provides a centralized hub to collect and manage certificates of insurance. It houses information to help you monitor compliance, provides you with data through reporting tools, and also displays each of your vendors’ compliance status. With an unparalleled level of customization, the BCS App can accommodate a virtually unlimited number of insurance and business requirements.
When it comes to achieving high compliance, technology is only valuable when backed by a talented and experienced team of experts. The heart of BCS is professional and knowledgeable analysts who personally reach out to your third parties and provide the support needed by your risk management, procurement and legal teams. That commitment to excellence combined with our proprietary certificate of insurance tracking software is simply a win-win.
To learn more about the BCS App, request a demo today.