Certificate of Insurance vs. Endorsements: Know the Difference
As an employer working with contractors, vendors, or third-party service providers, you might often encounter the terms Certificate of Insurance (COI) and endorsement. While they are both essential elements in the world of insurance, they serve different purposes. Understanding these differences is crucial to protecting your business from potential risks and liabilities. Do you know if a COI is enough, or should you request an endorsement? This blog will break down the key differences between COIs and endorsements, explain why each matters, and provide actionable steps for employers.
Understanding the 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. A COI typically includes:
- Policyholder’s name
- Coverage types (general liability, workers’ comp, auto, etc.)
- 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, reducing liability risks.
Explaining an Endorsement (Policy Modification)
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 coverage aligns with specific needs, particularly when additional protection is required beyond what the standard policy provides.
Highlighting Key Differences
Understanding the distinctions between COIs and endorsements is critical:
- 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:
- 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.
Ultimately, understanding COIs and endorsements in business contracts is paramount. While a COI confirms coverage, an endorsement ensures that this coverage meets specific needs. Employers should carefully review their insurance requirements and consult with a qualified insurance professional before hiring third parties.
