Does Your In-House Staff Understand Insurance Compliance? If not, COI Tracking Mistakes Can Occur

COI Management | June 9, 2022

I will often hear that a certificate of insurance is simply a certificate. How hard can it be to interpret the information off it? Surprisingly, it happens more often than you think. Having been thoroughly trained in insurance, especially specific to your industry is important to ensure that your contractor has proper coverage. Below are some of the most common examples of mistakes that can happen when conducting an in-house COI tracking program.  

Certificate Holder vs Additional Insured

The most common mistake is that someone will accept a certificate holder as an additional insured. They believe that because their organization’s name is listed on the COI, they have additional insured status when, in fact, they do not. You must verify this information is either specifically stated, the certificate holder’s name is correct and appropriately flagged in an additional insured column, or confirm the actual endorsements of the policy.

Name and Location of the Insured

Understanding the name of the insured may sound simple, however, without an understanding of how companies are structured and what name is truly on the insurance versus your contractor’s business name can be a challenge. Throw in DBA’s or Doing Business As and things can get really confusing! The named insured may be a company or individual’s name depending on the company structure. When collecting a COI and conducting COI tracking, be sure you verify the name insured and who is doing the work match up. 

In addition, your larger contractors may have multiple locations where insurance coverage is not the same from location to location or management does operations out of a separate location, but it is a different business entity altogether, hence a different name insured on the policy. It is important to verify that the coverage provided applies to the various locations. 

Limits

When it comes to the limits, you need to be aware of the different nuances specific to the policy you are requesting. For example, you could be confused on why auto policies sometimes have one limit and sometimes three limits and all four limits have different names. If you get the auto policy pages in as proof, you can see additional limits such as deductibles or underinsured. Be sure to understand the differences between split limits and combined single limits and whether they meet your requirements. Each policy is different and can have different terms that someone who is experienced will understand. 

Did you get the right policy?

Insurance has a lot of different coverages for different risks. For example, you may want to ensure that a contractor has a workers’ compensation policy to cover employee accidents, but you may not realize that the limits associated with that policy on a COI is actually for employers’ liability and does not include proof of a workers’ compensation in certain states. Or you may think that a Cargo policy covers a customer’s belongings when it should be Bailee coverage.

Fraudulent COIs

It is not uncommon for contractors to save money by declining to purchase business insurance or only the bare minimum insurance. To get around the requirements, they will submit fraudulent or modified COIs. Someone trained in insurance is more likely to identify a fraudulent COI because of the many nuances described above and more. There are mistakes on a COI that can cause a red flag to investigate further. 

These nuances and details around insurance are important because you may be provided proof of insurance thinking that the policy covers the contractor doing the work, only to find out that they were underinsured or not covered. Sadly, this is often discovered due to a lack of coverage for an accident. Do not let this happen to your organization. Contact PlusOne Solutions today to discuss your COI tracking needs.

Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.

About PlusOne Solutions

PlusOne Solutions has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.