Understanding COI vs. Endorsements for Employers

Do You Know If a COI Is Enough?

Employers who frequently engage contractors, vendors, or third-party service providers often come across the terms Certificate of Insurance (COI) and endorsement. While these might seem similar, understanding the key differences between them is crucial to protecting your business from potential risks and liabilities. So, is a COI sufficient, or should you ask for an endorsement? Let's break down the aspects of each to ensure you make informed decisions.

What is a Certificate of Insurance (COI)?

A Certificate of Insurance (COI) is a summary document issued by an insurer that verifies a business or individual has active coverage. It doesn’t change or modify any aspect of the policy; it merely serves as proof of the existing insurance. Key details typically found in a COI include:

• Policyholder’s name
• Coverage types (e.g., general liability, workers’ comp, auto)
• Policy limits and effective dates
• Insurer’s contact details

Requesting a COI before engaging a third party ensures that the necessary coverage is in place, significantly reducing liability risks for your business.

Understanding Endorsements (Policy Modifications)

An endorsement, also known as a rider, is a modification to an existing insurance policy that adds, removes, or changes the coverage terms. Unlike a COI, an endorsement legally alters the policy. Common examples include:

• Increasing policy limits
• Adding an additional insured (e.g., listing the employer on the contractor’s policy)
• Expanding protection to cover new risks

Endorsements ensure that insurance coverage aligns with specific needs, which is particularly important when additional protection is required beyond the standard policy terms.

Key Differences Between COIs and Endorsements

To clearly understand how COIs and endorsements differ, consider the following:

• 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 proper coverage, employers should adopt the following best practices:

• Always request a COI before contracting with third parties.
• Carefully review COI details, such as policy limits and expiration dates.
• Request an endorsement if additional coverage is necessary to ensure adequate protection.

Understanding the distinctions between COIs and endorsements is vital in managing business contracts. While a COI confirms coverage, requesting an endorsement ensures that this coverage meets your specific business needs. Employers should thoroughly assess their insurance requirements and consult with a qualified insurance professional before hiring third parties.