Understanding Certificates of Insurance and Endorsements

Employers often work with contractors, vendors, or third-party service providers, and they encounter terms like Certificate of Insurance (COI) and endorsements frequently. However, these terms serve different purposes. Understanding these differences is crucial for protecting your business from potential risks and liabilities. Do you know if a COI is enough, or should you request an endorsement? This blog aims to break down the key differences between COIs and endorsements, explain why each matters, and provide actionable steps for employers.

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. Key details included in a COI are: - Policyholder’s name - Coverage types (e.g., general liability, workers’ compensation, auto insurance) - Policy limits and effective dates - Insurer’s contact details Requesting a COI before hiring a third party ensures the business has the necessary coverage in place, thus reducing liability risks.

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 the employer on the contractor’s policy) - Expanding protection to cover new risks Endorsements ensure that coverage aligns with specific needs, especially when additional protection is required beyond what the standard policy provides.

Key Differences Between COIs and Endorsements

To grasp the distinction: - 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 for Insurance Coverage

Employers should consider the following actionable steps to ensure proper coverage: - Always request a COI before engaging contractors or vendors. - Review COI details carefully, checking policy limits and expiration dates. - If additional coverage is needed, request an endorsement to ensure proper protection. Understanding COIs and endorsements in business contracts is essential. While a COI confirms coverage, an endorsement ensures coverage meets specific needs. Employers should review their insurance requirements carefully and consult with a qualified insurance professional before hiring third parties.