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Certificate of Insurance – the COI

Certificates of Insurance sometimes cause confusion with clients and contractors alike. Here, we try to break down what they are, why they’re important, and what the best practices are surrounding COIs.

We all purchase insurance in some form or fashion, whether it be automobile, property, life, general liability, etc. For a contractor, insurance is critical because it not only protects the contractor’s business from many types of losses, but it also protects those clients the contractor performs works for. A COI is an important piece of paper which demonstrates to a client or prospective client that the contractor has certain insurance coverages with varying limits, which are, more often than not, required under most industry service contracts. The COI, when paired with an executed service agreement, provides the client with reassurance that, in the event of a loss or damage that specifically relates to the services or work performed by the contractor, the client will be made whole (known as indemnification). The service agreement should specify the types and limits of insurance to be carried by the contractor, and the conditions in which the contractor is to indemnify the client in the event of a loss. The COI should, at minimum, match or exceed those requirements set out in the service agreement.

Certificate of Insurance – the COI

It is ultimately up to the overseeing project manager to request a current version of the COI at the time of the project, as a COI is really just a ‘point in time’ document, and even if they have one, it might not cover all liability in the event of an incident. It’s important for the PM to be diligent – though ContractorCheck holds and stores contractors’ certificates, best practice is to request an updated COI at the start of any new project to make sure it’s current, up to date, and provides appropriate coverage.

“Just because you have a valid COI from a contractor, that does not necessarily mean the contractor is fully insured to the limits identified on the COI, or that they even have insurance at all.” -Kyle Nicholls, CRM, EP – Director, Environmental and Health & Safety

Understand the COI is a ‘point in time’ document. Typically provided by the contractor’s broker, the COI only demonstrates that, as of the date of issuance, the contractor held various insurance policies with the listed amounts of coverage. As a client, while it’s great to see a contractor has those insurances and limits required under the service agreement, as a best practice, you should always ask for an updated COI just before your project is to commence (as the contractor could have cancelled the insurance the day after the COI was issued). Further, have a discussion with your contractor, as they may have had other losses that may have already reduced the available coverage under those same policies. Be diligent because a COI is really just a piece of paper. While ContractorCheck holds the contractor’s COI, it’s incumbent upon the overseeing project manager to request, at the time of the project, an updated version.

Get Checked. Work Safe.