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Why COI? Certificates of Insurance

If you run a business, you have more than enough to worry about … your own risk management profile, for one. But when it comes to risk, business owners need to look beyond their own exposures and consider the risks presented by those who are working on their behalf, or working on their property. That’s where a Certificate of Insurance (COI) comes in.

Put simply, a COI proves that a particular party has current and adequate insurance coverage in place. COIs are used across a variety of business relationships, most notably with contractors who employ subcontractors on projects.

But the need for COIs goes well beyond the construction industry. Regardless of the business you’re in, if someone is doing work at your facility and isn’t properly insured, you could wind up being liable if a worker is injured on the job … or left without recourse if the project isn’t correctly completed.

The proper use of COIs:

  • Protects you from taking on unnecessary risks if a contractor is responsible for a loss and isn’t adequately insured
  • Insulates your business from claims due to a contractor being injured on your property in the course of a project
  • Ensures that you’re compensated if contracted work isn’t done properly, or isn’t completed

Keeping COIs current can be an administrative headache, and as with most business practices, organizations need to have processes in place to collect and maintain them. Systems are available that automate the process, flagging expiration dates and so forth. Whether the process is automated or manual, though, the key is consistency. You may have used the same contractor 99 times, but you still can’t just take their word for it that they have adequate coverage. After all, the 100th time could be the one where things go south.

Questions about Certificates of Insurance? Contact Consolidated Insurance.