Certificate of Insurance vs. Endorsements: Key Insights

Understanding the Importance of COIs and Endorsements

As an employer working with contractors, vendors, or third-party service providers, terms like Certificate of Insurance (COI) and endorsements frequently arise. While they serve different purposes, understanding these differences is crucial to safeguarding 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 break down the key differences between COIs and endorsements, explain their significance, and provide actionable steps for employers.

What is a Certificate of Insurance (COI)?

A Certificate of Insurance (COI) is a summary document issued by an insurer to confirm that a business or individual has active coverage. Normally, a COI includes important details such as:

  • Policyholder’s name
  • Types of coverage (general liability, worker’s compensation, auto, etc.)
  • Policy limits and effective dates
  • Insurer’s contact details

Requesting a COI before hiring a third party ensures that the necessary coverage is in place, significantly reducing liability risks.

What is an Endorsement?

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, such as listing the employer on the contractor’s policy
  • Expanding protection to cover new risks

Endorsements are critical as they ensure that coverage aligns with specific needs, especially when additional protection is necessary beyond the standard policy.

Key Differences

A clear understanding is essential:

  • 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

Employers should take the following steps to ensure proper coverage:

  • 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.

Understanding COIs and endorsements is vital in business contracts. While a COI confirms coverage, an endorsement ensures it meets specific needs. Employers are encouraged to review their insurance requirements closely and consult with a qualified insurance professional before hiring third parties.