Certificate of Insurance and Endorsements: Essential Employer Insights

Understanding the Basics

As employers working with contractors, vendors, or third-party service providers, you may frequently encounter terms like Certificate of Insurance (COI) and endorsement. While both are crucial in managing risks, they serve different purposes. Understanding these differences is vital in protecting your business from potential liabilities. Do you know if a COI is enough, or should you request an endorsement? Let's break down their key differences and why each matters.

What is a Certificate of Insurance (COI)?

A COI is a summary document issued by an insurer, confirming that a business or individual has active coverage. This document typically includes:

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

Why it matters: Requesting a COI before hiring a third party ensures that they have the necessary coverage, reducing liability risks for your business.

What is an Endorsement?

An endorsement, or rider, is a modification to an existing insurance policy that adds, removes, or alters coverage terms. Common examples include:

• Increasing policy limits
• Adding an additional insured (e.g., including your business on a contractor’s policy)
• Expanding protection to cover new risks

Why it matters: Endorsements ensure that coverage aligns with your specific needs, especially when additional protection is required beyond what a standard policy provides.

Key Differences Between COIs and Endorsements

It's important to differentiate between a COI and an endorsement:

• A COI serves as proof of existing insurance but does not alter policy terms.
• An endorsement legally modifies a policy, adding or removing coverage as needed.

Employer Best Practices

Ensure proper coverage with these actionable steps:

• 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 guarantee appropriate protection.

Understanding COIs and endorsements in business contracts is crucial. While a COI confirms coverage, an endorsement ensures that it meets your specific needs. Carefully review your insurance requirements and consult with a qualified insurance professional before hiring third parties.