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What is a Certificate of Insurance?
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What is a Certificate of Insurance?

Our team wrote an article to explore and help make sense of a certificate of insurance (COI).

January 19, 2023

January 20, 2023

An Exploration into the Elements of a COI

A certificate of insurance (COI) is a document that summarizes the coverage provided by an insurance policy, and therefore, it's a representation of coverage and not an actual insurance policy. An insurance company, agency or broker typically issues a COI to provide evidence that an individual or business has insurance coverage in place. 

The certificate of insurance generally includes information about the type of coverage provided, the policy limits, the policy’s effective and expiration dates, and the insured parties. It may also include the name and contact information of the insurance company, the policy number, and the name and contact information of the policyholder.

Certificates of insurance are often required when a business or individual is working with another party, such as a vendor or contractor, to provide evidence that they have the necessary insurance coverage in place to protect against potential losses or liabilities. For example, a company may require a contractor to provide a certificate of insurance before allowing them to work on a project to ensure that the contractor has the necessary liability coverage in case of any accidents or injuries that may occur during the course of the work.

The History of COIs: From Hand-Written to Digital Documents

When it comes to insurance, we’ve gone from hand-written policy documents that were often difficult to decipher to online portals that offer digital access to documentation and dashboards for easy viewing and verification. Let’s take a look back at the journey between.

There’s no chicken-or-egg debate here. Insurance policies came first, with early forms of insurance essentially dating back to the start of civilization, and COIs followed much later.

The first modern insurance companies began forming in England in the early 1700s, often focusing on marine and fire insurance, and quickly spread across the globe. As modernization and globalization increased, the insurance industry grew to cover a variety of insurance types.

To provide a more easily understood summary of the terms of an insurance policy and extend additional insured status to third parties, insurers began issuing certificates of insurance. In a condensed format, COIs outlined the key terms of the policy.

However, it wasn’t until 1976 that the first standardized certificate of insurance form was circulated. Because of the utility of its conciseness and ability to reduce liability, the use of standardized COIs has become more widespread over time.

These documents are now commonly used to provide proof of insurance and coverage to third parties, such as property managers, event venues, and other companies. In many cases, these third parties will require a certificate of insurance as a condition of doing business with an insured party to ensure that the insured party has the necessary coverage to protect against financial losses resulting from accidents, injuries, or damage to property.

Despite the fact that streamlined online portals exist, paper copies of certificates of insurance are still commonly used today. Because they are often required to be provided in certain circumstances, such as when a COI is being used to satisfy a legal requirement, the time-consuming process of furnishing paper copies can create unwanted bottlenecks, unnecessary complexity, and increased risk for all parties involved.

In ACORD: A Standardized Form in the United States

Founded in 1970, the Association for Cooperative Operations Research and Development (ACORD) is a U.S. nonprofit industry organization that develops and maintains a wide range of insurance-related forms and standards. These standardized forms are used to exchange information between insurers, insured parties, and other stakeholders. One such form is a certificate of insurance.

Widely used as the standard in the United States, an ACORD COI form includes information about the insured party, the policy number, the effective dates of the policy, and the types and limits of coverage provided. It also outlines the name and contact information of the insurance company, the insurance agent or broker who sold the policy, and any additional insured parties.

The most common form is the ACORD 25, which is used for standard forms of property and casualty insurance. The ACORD 24 form may also be used to highlight inland marine and crime coverage, or an ACORD 27 or 28 form may be required to outline property insurance.

While they’re standardized, ACORD forms are also designed to be flexible and can be customized to meet the needs of specific situations. For example, the ACORD COI form can be modified to highlight particular coverage provisions relevant to the insured party or the requesting party.

ACORD's certificate of insurance form is widely used in the insurance industry, and it’s recognized as a standard form by many insurers, brokers, and other industry professionals in the United States. 

Eh Standard: The Commonly Used COI Form for Canada

The Canadian Standards for Insurance Operations (CSIO) is a national organization that was founded in 1981 to develop and maintain uniform documentation and processes for the Canadian insurance industry. Similar to ACORD’s version, CSIO forms help streamline insurance-related processes through standardization. However, this form is solely digital.

The electronic CSIO certificate of insurance includes the same information as the ACORD model of the same form:

  • The insured party
  • The policy number
  • The effective dates of the policy
  • The types and limits of coverage provided
  • The name and contact information of the insurance company
  • The insurance agent or broker who sold the policy
  • Additional insured parties

And just like ACORD forms in the United States, CSIO forms are customizable to meet situational needs in Canada. 

Top 10: The Most Common Items in a COI 

The elements of a certificate of insurance may vary depending on the specific policy and the requirements of the party requesting the certificate. However, some of the typical information includes:

  1. Date: The date the COI was created.
  1. Producer: The name and contact information of the insurance company that issued the policy.
  1. Insured: The name of the individual or entity covered by the insurance policy.
  1. Contact: The name and contact information of the insurance agent or broker who sold the policy.
  1. Insurer: The insurance companies providing the listed coverage.
  1. Coverages: A description of the types of coverage provided by the policy, such as general liability, professional liability, commercial auto, umbrella insurance, workers’ compensation, property damage, medical expenses, or business interruption. The maximum amount of money the insurance company will pay out for each type of incident under the policy’s coverage will also be listed.
  1. Policy number: A unique identifier assigned to the policy by the insurance company that’s used to track and identify it.
  1. Effective and expiration dates: The start and end dates of the policy period. The COI may specify the start and end dates of the policy period, or it may simply list the policy's expiration date. 
  1. Description of operations, locations, vehicles: An entry to capture specific requests, such as listing the names of any other individuals or entities as additional insured parties. A list of events, circumstances, or entities not covered by the policy may also be listed here. 
  1. Certificate holder: The individual or organization to whom the certificate of insurance was issued.

Unless you’re using a streamlined online system that alerts you to issues like inadequate coverage, expired policies, or other lapses, you’ll need to carefully and comprehensively review COIs to make sure documents accurately reflect the coverage purchased, policies are up-to-date, and the coverage meets specified requirements.

4 Failures: The Often-Occurring Obstacles with COIs

There are 4 several common issues that can arise with certificates of insurance:

  1. Inaccurate or incomplete information. 
    The information on a certificate of insurance needs to be accurate and complete, as a failure to do so can lead to delays, misunderstandings, non-compliance issues, or disputes.
  1. Outdated or expired policies. 
    If a policy has expired or its terms are outdated, the certificate holder may be at risk legally and financially. 
  1. Delayed delivery.
    If the insured party and its agent or broker require lengthy lead times to furnish COIs, it can lead to issues. 
  1. Misunderstandings of the requirements. 
    Individual and business needs can be complex, and it's necessary the insured party understands and complies with the requesting party's requirements to avoid disputes, delays, or a risk of liability.

Finding solutions that address these problems can help insured parties and requesting parties avoid potential issues, disputes, and risk. Making the request and delivery process as automated and seamless as possible can ensure many of these problems don’t arise.

A Favored Form: The Importance of a COI

In general, a COI is intended to provide assurance that the insured party has the necessary coverage in place to protect against financial losses resulting from accidents, injuries, or damage to property. There are several reasons why a certificate of insurance is essential:

  1. Demonstrating proof of insurance. 
    A certificate of insurance is typically used to provide proof of insurance to third parties.
  1. Providing assurance of coverage. 
    A COI provides assurance that the insured party has the necessary coverage to protect against financial risks, ensuring that both parties are covered in the event of a loss.
  1. Meeting requirements. 
    In many cases, third parties will require a certificate of insurance as a condition of doing business. For example, a property manager may require a contractor to provide a COI before beginning work. By providing a certificate of insurance, the insured party can meet these requirements and move forward with the transaction.
  1. Protecting against legal liability. 
    A certificate of insurance can also protect against legal liability. For example, if an insured party is sued for damages resulting from an accident or injury, the COI may provide evidence of the coverage in place to help defend against a lawsuit.

Overall, a certificate of insurance is a critical document that can provide assurance, protection, and peace of mind to both the insured party and the requesting party. 

A Patented Platform: How Certificial Compares

Our Smart COI Network connects all parties on a single platform, allowing one to request Smart COIs directly or via one of our partners. Agents can issue Smart COIs by integrating their Agency Management System, saving time and money.

With an account already set up, the process is super simple. A request for a COI is sent, and the agent is notified. Because the policy information is already in the system, it can be as simple as approving the request. Then, an email is automatically sent to the requestor with the COI, which is also accessible within our platform.

If information needs to be added or adjusted, that task can be completed manually through dropdowns or entries, or it can be automated via an API, depending on the Agency Management System.

The process is incredibly efficient for those without accounts yet, too. A request would be sent to the insured via email, asking the recipient to complete a quick registration. 

The insured would then add their agent to the account. Depending on the Agency Management System, the agent would add the policy information either through dropdowns, manual entry, or an API. It's then as simple as approving the request, and delivery of and access to the COI is all automated via email and the system after approval is rendered.

Interested in exploring how Certificial works before giving it a try for free? Register for a complimentary demo that's tailored to your needs and uses.


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Read On: Additional Resources 

Want to learn more about COIs? Explore these additional resources:

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