Understanding COIs and Endorsements: Key Insights for Employers

Understanding the Difference: Certificate of Insurance vs. Endorsements

As an employer working with contractors, vendors, or third-party service providers, you might frequently encounter the terms Certificate of Insurance (COI) and endorsement. While they may appear similar, each serves distinct purposes. Understanding these differences is crucial to safeguard 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 clarify the key differences, explain the significance of each document, and offer actionable insights for employers.

Defining a Certificate of Insurance (COI)

A Certificate of Insurance (COI) is essentially a summary document issued by an insurer that confirms a business or individual holds active coverage. It's important to know that a COI serves as proof of insurance but does not modify any policy terms. Key details found in a COI typically include:

• 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 engaging a third party ensures that the business has the necessary coverage in place, thus reducing liability risks.

Explaining an Endorsement (Policy Modification)

An endorsement, also known as a rider, is a modification to an existing insurance policy. It can add, remove, or alter the coverage terms. Here are some common examples of endorsements:

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

Endorsements are crucial because they ensure the coverage aligns with specific needs, especially when additional protection is necessary beyond what the standard policy offers.

Key Differences at a Glance

Understanding these distinctions can be vital:

• A COI serves as proof of existing insurance but does not alter policy terms.
• An endorsement legally modifies the policy and can add or remove coverage.

Employer Best Practices

To ensure proper coverage, employers should consider the following steps:

• Always request a COI before engaging contractors or vendors.
• Review COI details carefully, checking policy limits and expiration dates.
• If additional coverage is necessary, request an endorsement to ensure proper protection.

Understanding COIs and endorsements in business contracts is vitally important. A COI confirms that coverage exists, but an endorsement ensures the coverage meets specific needs. Take the time to review your insurance requirements carefully and consult with a qualified insurance professional before hiring third parties.