How To Read a Certificate of Insurance

Summary

This video explains how to read a Certificate of Insurance (COI), a document summarizing a business's insurance coverage. COIs are often requested by companies to ensure that their vendors, subcontractors, or tenants have adequate insurance. The video highlights key elements to check, such as the insured and certificate holder sections, policy types, limits, expiration dates, additional insured endorsements, and exclusions. Understanding these details helps protect both vendors and clients throughout their business relationships, ensuring proper coverage and compliance with contractual requirements.

Takeaways

• 😀 A Certificate of Insurance (COI) summarizes a business's insurance coverage and is typically requested by third parties, such as clients or vendors, to ensure the insurance is valid.
• 😀 COIs are often required by companies or entities to verify that their vendors, subcontractors, tenants, or other third parties have suitable insurance coverage.
• 😀 Key elements to focus on when reading a COI include the insured, policy types, limits, expiration dates, certificate holder, additional insurance, endorsements, exclusions, and description of operations.
• 😀 The 'insured' section lists the company that purchased the insurance, while the 'certificate holder' is the business or entity requesting the COI, often a client or partner.
• 😀 For example, in a property management company hiring a painting business, the painting company is the insured, and the property management company is the certificate holder.
• 😀 The 'policy types' and 'limits' show the types of coverage and the maximum payout for claims under the insurance policy.
• 😀 The 'expiration dates' indicate when the insurance policies will expire, helping to ensure the coverage remains active.
• 😀 An 'additional insured' is someone added to an existing policy to offer protection or comply with a contractual agreement.
• 😀 A company may require its vendors to list them as an 'additional insured' to protect their interests, such as in the case of a property management company and a painting company.
• 😀 Endorsements are changes made to an existing policy, including higher limits or specific exclusions that could affect risk exposure during business relationships.
• 😀 Exclusions refer to circumstances where no coverage will apply, and these are sometimes detailed in the actual policy rather than the COI itself.

Q & A

What is a Certificate of Insurance (COI)?

A Certificate of Insurance (COI) is a document that summarizes a business's insurance coverage. It is typically requested by a company or entity to confirm that their vendors, subcontractors, tenants, or third parties have valid insurance coverage.

Why would a company request a COI from a vendor or subcontractor?

A company requests a COI from a vendor or subcontractor to verify that they have appropriate insurance coverage before starting a working relationship. This helps ensure that both parties are protected in case of any issues or claims.

What are the key elements to look for when reading a COI?

When reading a COI, it’s important to check the following elements: the insured, policy types, limits, expiration dates, certificate holder, additional insurance, endorsements, exclusions, and any wording in the description of operations.

What information is listed under the 'insured' section of a COI?

The 'insured' section of a COI lists the name of the company that purchased the insurance coverage. This is typically the vendor or subcontractor who has the insurance policy.

What does the 'certificate holder' section on a COI represent?

The 'certificate holder' section lists the business or entity that has requested the COI. This is often the company or organization that wants to ensure that their vendor or subcontractor has adequate insurance coverage.

What is the significance of policy types and limits on a COI?

The policy types and limits indicate the kinds of insurance coverage the insured has and the maximum amount the insurance company will pay out in the event of a claim. The limits are crucial for understanding the scope of coverage.

Why are expiration dates important on a COI?

Expiration dates show when the insurance policies listed on the COI will expire. It is important to ensure that the coverage is valid throughout the duration of the contract or relationship.

What is meant by 'additional insured' in a COI?

An additional insured is a person or entity added to an existing insurance policy after it has been issued. This can be done to protect the other party or fulfill a contractual requirement, such as when a property management company requires a painting company to add them as additional insured.

What are endorsements in the context of a COI?

Endorsements are changes made to an insurance policy after it has been issued. These changes can include higher coverage limits or specific modifications to the terms of the policy.

What are exclusions in an insurance policy, and do they appear on a COI?

Exclusions are specific circumstances where no coverage applies. While exclusions may not always be listed on a COI, they are typically detailed within the actual insurance policy itself and can significantly affect the level of risk exposure.