Understanding Certificates of Insurance and Endorsements

As an employer working with contractors, vendors, or third-party service providers, you're likely to encounter terms such as Certificate of Insurance (COI) and endorsement. But do you know if a COI is enough, or should you request an endorsement? Understanding the differences between these terms is crucial for protecting your business from potential risks and liabilities. The purpose of this blog is to break down the key differences between COIs and endorsements, explain why each matters, and provide actionable steps for you as an employer.

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. Here are the key details typically found in a COI: - Policyholder’s name - Coverage types (general liability, workers’ comp, auto, etc.) - Policy limits and effective dates - Insurer’s contact details Requesting a COI before hiring a third party is a vital practice. It ensures that the business you engage with has the necessary coverage in place, reducing liability risks for your own business.

Understanding Endorsements (Policy Modifications)

An endorsement, also known as a rider, is a modification to an existing policy that adds, removes, or alters coverage terms. Common examples of endorsements include: - Increasing policy limits - Adding an additional insured (e.g., listing your company on the contractor’s policy) - Expanding protection to cover new risks Endorsements matter because they ensure coverage aligns with your specific needs. If you require additional protection beyond what a standard policy provides, an endorsement can secure your business interests.

Key Differences You Should Know

To clarify further, here is a straightforward comparison: - 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

To ensure your business is properly covered, consider these actionable steps: 1. Always request a COI before engaging contractors or vendors. 2. Review COI details carefully, checking policy limits and expiration dates. 3. If additional coverage is needed, request an endorsement to ensure proper protection. Understanding the role of COIs and endorsements in business contracts is imperative. While a COI confirms coverage, an endorsement ensures that the coverage meets specific needs. Always review your insurance requirements carefully and consult with a qualified insurance professional before hiring third parties.