
Published April 13, 2021 • 3 minute read
Published April 13, 2021 • 3 minute read
Simply put, a certificate of insurance (COI) is to business insurance what an auto ID card is to auto insurance. It is proof of insurance for your business.
When you purchase an auto insurance policy, you also receive a companion document—the insurance card. You keep this in your vehicle to produce as proof of insurance in the event of an accident or traffic stop. Likewise, when you purchase a general liability policy, you should also procure a certificate of insurance that you can use to prove the insured status of your business when entering into new contracts.
Just as an insurance card is a small, compact version of an otherwise lengthy contract, a certificate of insurance contains all of the most pertinent details of your general liability policy on a standardized, single-page form. The most commonly used type of COI is the ACORD 25 form.
It is important to note that the insurance card itself is not a policy; rather, the document’s sole purpose is convenience. The same holds true of a certificate of insurance for business. A COI is simply intended to streamline access to the most important information in your policy, including the type of coverage, the carrier, the effective and expiration dates of the policy, and the policy limits.
If you are a business owner, you should have a certificate of insurance. It really is that simple.
Certificates of insurance are essential documents within any industry that utilizes contracted labor. Whether you work in construction or hospitality, logistics or healthcare, once contracts are signed and work begins, good insurance standing is all there is to protect an entity from third-party liability.
Things become more complex as more entities enter the picture. As a project owner, not only are you responsible for the insurance policy of your business, but you're also vulnerable to the details of every one of your vendors’ policies, and each worker comes with their own risk of personal injury or property damage. More vendors mean more liability, and certificates of insurance help protect against third-party risk.
To mitigate your risk, you should have processes in place for collecting and verifying your vendors’ COIs.
Here are a few things you’ll want to consider during your COI tracking and assessments:
Hot Tip: Beware of vendors who undercut the prices of their competitors, as this is often an indication that a business is underinsured.
Large projects, such as hotel construction, often involve hundreds of workers and therefore, hundreds of COIs. Accurately collecting and tracking all of these can quickly become a massive time suck. If you outsource a lot of labor, your best defense against costly insurance document oversight is to entrust your document management to a COI tracking service provider, such as Business Credentialing Services (BCS).
COI tracking is Business Credentialing Services’ prime service offering. With help from our proprietary software, the BCS App, we will empower you to collect and review COIs or our team will do so on your behalf. The self-service solution equips you with our time-saving platform, while the full-service option also provides expert analysts to work with insurance agents and vendors to correct any insurance discrepancies we inevitably encounter.
Here’s how the sausage is made with our full-service solution:
To learn more about COI tracking, read our guide "Everything You Need to Know About Certificates of Insurance," or schedule a demo today.
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